Higher finance cost turns Aisha Steel's profits into losses

MG News | September 24, 2020 at 10:19 AM GMT+05:00

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September 24, 2020 (MLN): Aisha Steel Mills (ASL) has announced its financial results for FY20, wherein the company has reported a net loss of Rs 616 million (LPS: Rs 0.89) against the net profit of Rs 253 million (EPS: Rs 0.26) reported in FY19.

According to the financial results issued to PSX, the company incurred losses during the FY20 on an account of weak demand and higher finance cost.

In FY20, the topline of the company witnessed an increase of 47.2% YoY due to higher offtakes stemming from new online expansion, as per the research of Fortune Securities, resulting in an increase in gross profits by 41% to Rs 2.36 billion.

On the cost side, the major highlight is the upsurge in expense heads as administrative expenses went up by 28% YoY from Rs 249 million to Rs 319 million. Moreover, selling and distribution costs rose by 67% to Rs 41 million.

However, it was the rise in finance cost which ballooned by 81.5% YoY which turned the company’s profits into losses. The company’s financing expenses increased on the back of an increase in long term borrowings due to expansion, research by Darson securities mentioned.

Profit and Loss Account for the year ended June 30, 2020 (Rupees '000)
	Jun-20	Jun-19	% Change
Revenue from contracts with customers	29,776,828	20,230,797	47.2%
Cost of sales	(27,410,644)	(18,552,531)	47.7%
Gross Profit	2,366,184	1,678,266	41.0%
Selling and distribution cost	(41,889)	(25,070)	67.1%
Administrative expenses	(319,589)	(249,346)	28.2%
Other income	38,186	49,027	-22.1%
Profit from operations	2,042,892	1,452,877	40.6%
Finance cost	(3,386,116)	(1,865,306)	81.5%
(Loss) before income tax	(1,343,224)	(412,429)	225.7%
Taxation	726,651	666,127	9.1%
(Loss)/ profit after taxation	(616,573)	253,698	-
Earnings/(loss) per share - Basic	(0.89)	0.26	-

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