January 27, 2022 (MLN): Interloop Limited (PSX: ILP) declared its profit-after-tax (PAT) for 1HFY22 at Rs4.72 billion (EPS: Rs5.25), registering a growth of 62.4%, from Rs2.90bn (EPS: Rs3.23) earned in the corresponding period of the last fiscal year, the company’s filing on PSX revealed today.
In conjunction with financial results, the company announced an interim cash dividend for the year ended June 30, 2022, at Rs2 per share i.e., 20%.
This increase in profitability was mainly attributable to a whopping increase in gross margins amid higher revenue during the period under review.
It is pertinent to note that the company has grown into one of the world’s largest hosiery manufacturers; a complete vertically integrated company with state-of-the-art spinning, yarn dyeing, knitting and finishing facilities. This hosiery segment contributes 76% to the overall topline.
Going by the financial statement, the net sales of the company increased by around 50% YoY to Rs39.35bn, mainly due to the addition of new machineries in its hosiery division fostering volumetric sales of the company. In addition, utilization of hosiery division stands nearly at 100%, a research note by Arif Habib Limited said.
Resultantly, the gross margins improved by 2ppt to 27% in 1HFY22 majorly accredited to PKR depreciation coupled with better economies of scale and addition of state-of-the-art machinery adding efficiencies to the plant.
On the cost front, the company’s major expense head i.e., administrative expenses ballooned by 51.5% YoY to Rs1.95bn during the said period while distribution cost went up 34% YoY due to excess export orders and the addition of new machinery in knitwear and denim division.
Among other line items, the other operating expenses of the company witnessed a more than two-fold increase to Rs974mn. On the other hand, other income plunged by 47% to Rs25mn.
Meanwhile, the finance costs of the company increased by 69% YoY to Rs871mn in 1HFY22 on account of higher reliance on borrowings to meet CAPEX requirements. Further, an increase in the policy rate by the central bank was also one of the reasons behind this increase in financial costs.
On the tax front, the company’s effective tax rate stood at 7% compared to 6% in 1HFY21.
|
Financial Results for the half-year ended December 31, 2021 ('000 Rupees) |
|||
|---|---|---|---|
|
|
Dec-21 |
Dec-20 |
% Change |
|
Net Sales |
39,346,676 |
26,262,548 |
49.82% |
|
Cost of Sales |
(28,898,550) |
(19,796,131) |
45.98% |
|
Gross profit |
10,448,126 |
6,466,417 |
61.58% |
|
Distribution Cost |
(1,610,260) |
(1,203,753) |
33.77% |
|
Administrative expenses |
(1,951,389) |
(1,288,143) |
51.49% |
|
Other operating expenses |
(974,904) |
(408,904) |
138.42% |
|
Other income |
25,076 |
47,561 |
-47.28% |
|
Profit from operations |
5,936,649 |
3,613,178 |
64.31% |
|
Finance Cost |
(871,555) |
(516,607) |
68.71% |
|
Profit before Taxation |
5,065,094 |
3,096,571 |
63.57% |
|
Taxation |
(347,489) |
(192,209) |
80.79% |
|
Profit after taxation for the year |
4,717,605 |
2,904,362 |
62.43% |
|
Earnings per share – basic and diluted (Rupees) |
5.25 |
3.23 |
62.54% |
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