International Steel Ltd's profitability declines by 20% on account of higher cost of sales

MG News | January 25, 2019 at 04:06 PM GMT+05:00

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January 25, 2019 (MLN): The profitability of International Steels Limited has declined by 19.8% for the half year ended December 31, 2018, primarily due to increase in company’s cost of sales, higher finance cost and PKR depreciation which the company wasn't able to pass on to the customers in full.

The aforesaid results are in line with the market expectations that projected ISL’s profit after tax for 1HFY19 to be locked in between Rs.1,688 million to Rs.1,779 million with EPS ranging from Rs.3.9 to Rs.4.1.

The impact of increase in company’s sales revenue by 11.68% was countered by a relative increase in the cost of sales by 18.07%.
Moreover, the company’s major expense heads i.e. Selling & Distribution and Administration cost increased by 17.8% and 15.6% respectively, further dragging down the bottom-line earnings.

The company reported its Earing per share at Rs 4.02 for the six months ending December 31, 2018.

The Board of Directors of the company has decided to approve the payment of an interim cash dividend for the half year ended December 31, 2018 at Rs. 1.50 per share, that is 15%.

Profit and loss account for the six months ended December 31 2018 (Rupees'000)
	Dec-18	Dec-17	% Change
Net Sales	24,780,895	22,189,671	11.68%
Cost of Sales	-21,714,072	-18,390,849	18.07%
Gross Profit	3,066,823	3,798,822	-19.27%
Selling and distribution expenses	-242,883	-206,207	17.79%
Administrative expenses	-135,185	-116,879	15.66%
Finance cost	-591,843	-232,316	154.76%
Other operating expenses	-164,433	-252,028	-34.76%
Other income	83,386	48,726	71.13%
Profit before taxation	2,015,865	3,040,118	-33.69%
Taxation	-267,404	-858,575	-68.85%
Profit after taxation for the period	1,748,461	2,181,543	-19.85%
Earnings per share-basic and diluted	4.02	5.02	-19.92%

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