LOTCHEM: Strong PTA-PX margins elevate net income

MG News | February 17, 2022 at 01:45 PM GMT+05:00

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February 17, 2022 (MLN): Lotte Chemical Pakistan Limited (LOTCHEM) reported a net profit to Rs4.64billion (EPS: Rs3.07) in the calendar year 2021, up by 2.18 times YoY when compared to a net profit of Rs2.13bn in CY20, backed by higher gross margins amid PTA-PX margins.

According to a financial statement sent to Exchange, the revenue from operations rose by nearly 72.4% YoY to Rs67bn due to higher volume sold due to robust demand from the textile sectors coupled with higher PTA-PX margins, resulting in a gross profit of Rs7.58bn, showing nearly a nearly 3-fold increase YoY in the said period. The company’s gross margins improved by 5ppt to 11% in CY21.

On the cost front, LOTCHEM’s distribution and selling expenses and other operating expenses surged by 11.6% YoY and 2.06x YoY to Rs119mn and Rs487mn, respectively in CY21.

Notably, the finance cost of the company witnessed a colossal increase of 6.5 times YoY to Rs974mn mainly due to exchange loss on dollar base lease liabilities amid PKR deprecation, limiting the bottom-line growth of the company.

On the tax front, in CY21, the company paid taxes worth Rs1.85bn, up by 2.12x YoY.

Proft and Loss Account for the year ended December 31, 2021 ('000 Rupees)
	Dec-21	Dec-20	% Change
Revenue from contract with customers-net	67,164,965	38,964,851	72.37%
Cost of Sales	(59,583,590)	(36,322,627)	64.04%
Gross Profit	7,581,375	2,642,224	186.93%
Distribution and Selling Expenses	(119,677)	(107,275)	11.56%
Administrative Expenses	(490,989)	(572,159)	-14.19%
Other operating expenses	(487,502)	(235,526)	106.98%
Other Income	989,844	1,422,069	-30.39%
Finance Costs	(974,044)	(150,248)	548.29%
Profit before Taxation	6,499,007	2,999,085	116.70%
Taxation	(1,856,097)	(873,980)	112.37%
Profit after Taxation	4,642,910	2,125,105	118.48%
Earnings per share - Basic and Diluted (Rs.)	3.07	1.40	119.29%

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