January 31, 2022 (MLN): International Steels Limited (ISL), a market leader in CRC and GI sheets has announced its financial performance for the six months ended on December 31, 2021, as per which the profits after tax (PAT) of the company expanded by 52.25% YoY to clock in at Rs4.22 billion, compared to Rs2.7bn in 1HFY21.
Given this, the company’s earnings per share moved up from Rs9.38 per share to Rs9.71 per share.
In conjunction with the results, the company announced a final cash dividend of Rs2 per share i.e., 20% for 1HFY22.
The notable earnings were mainly attributable to strong demand from the automobile and construction sector; High CRC-HRC spread; full impact passed on to consumers amidst rising raw material prices; and inventory gains.
The net revenue of the company increased by 29.18%YoY mainly due to a positive shift in economic activities and rebound in sectors like autos, pipes, and appliances.
The gross margins clocked in at 16.65% during the review period compared to 14.79% in 1HFY21 due to high growth in sales and a significant increase in CRC/HDGC/CCC prices.
On the costs front, distribution and administration expenses have come at Rs396 million and Rs164mn, up by 10.5% YoY and 13.6% YoY, respectively. Higher distribution expenses can be explained by greater export proceeds. Meanwhile, other expenses also witnessed an increase of 64% YoY to stand at Rs585mn.
On the back of monetary tightening by SBP, the finance cost of the company almost surged by 24% YoY during 1HFY22 and stood at Rs544mn.
Overall, ISL has posted remarkable results on the back of strong gross margins with high CRC-HRC spreads, and inventory gains. The steel and engineering sector is highly correlated with the country’s GDP growth, as the sector volumes heavily rely on infrastructural projects and other electronics manufacturing.
Going forward, the company is planning to set up a Hot Strip Mill with an initial designed capacity of 1.2 million tons (MTs) in Pakistan to localize Hot Rolled Coil (HRC) manufacturing that is to be completed by the end of CY24.
In addition, the management also foresees robust growth in exports in FY22 where ISL is expected to export to 30 countries across the globe.
|
Financial Results for the six months ended December 31, 2021 ('000 Rupees) |
|||
|---|---|---|---|
|
|
Dec-21 |
Dec-20 |
% Change |
|
Net Sales |
43,294,474 |
33,515,947 |
29.18% |
|
Cost of Sales |
(36,083,968) |
(28,559,880) |
26.34% |
|
Gross profit |
7,210,506 |
4,956,067 |
45.49% |
|
Administrative Expenses |
(164,849) |
(145,181) |
13.55% |
|
Selling and distribution expenses |
(396,466) |
(358,837) |
10.49% |
|
Finance costs |
(544,351) |
(437,895) |
24.31% |
|
Other operating charges/income-net |
(585,361) |
(356,168) |
64.35% |
|
Other income |
152,823 |
309,564 |
-50.63% |
|
Profit before taxation for the year |
5,672,302 |
3,967,550 |
42.97% |
|
Taxation |
(1,448,636) |
(1,193,422) |
– |
|
Profit after taxation for the year |
4,223,666 |
2,774,128 |
52.25% |
|
Earnings per share – basic and diluted (Rupees) |
9.71 |
6.38 |
52.19% |
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