Millat Tractors: Lower sales volume hurts profitability

April 27, 2020 (MLN): Millat Tractors Limited (MTL) has announced its financial results for the 9MFY20 as per which company’s net profits has declined by around 55% YoY to clock in at Rs 1.20 billion (EPS: Rs 24.13) against the net profits of Rs 2.66 billion (EPS: Rs 53.40) of the corresponding period last fiscal year.

According to a research note by Arif Habib Limited, the decline in profitability is attributable to the contraction in sales volume on the back of lower yields of farmers on agriculture products, resulting in lower demand for tractors.

As per the financial statement issued by the company to PSX, the company’s gross profits plunged by 37.4% YoY due to a drop in sales revenue despite a 26% decline in the cost of sales, shrinking gross margins from 22% to 19%.

On the expense front, the distribution and marketing expenses of the company remained flat while the other operating charges dropped by 70% YoY to Rs 159 million.

On the other hand, other income of the company plummeted by 71% YoY to Rs 116 million.

Meanwhile, the finance cost soared by 3.5 times YoY, from Rs 89 million to Rs 316 billion due to a substantial increase in short term borrowing while the tax expenses of the company fell by 51% YoY, providing the cushion to its earnings.                                

Consolidated profit and loss account for the nine months ended March 31st, 2020 ('000 Rupees)

 

Mar-20

Mar-19

% Change

Sales- net

 16,852,721

 23,567,834

-28.49%

Cost of sales

 13,641,269

 18,439,011

-26.02%

Gross profit

 3,211,452

 5,128,823

-37.38%

Distribution and marketing expenses

 530,508

 537,257

-1.26%

Administrative expenses

 566,520

 581,000

-2.49%

Other operating expenses

 159,784

 530,089

-69.86%

 

 1,256,812

 1,648,346

-23.75%

Other income

 116,107

 398,680

-70.88%

Operating profit

 2,070,747

 3,879,157

-46.62%

Finance costs

 316,386

 89,234

254.56%

Profit before tax

 1,754,361

 3,789,923

-53.71%

Taxation

 552,085

 1,129,108

-51.10%

Profit for the year

 1,202,276

 2,660,815

-54.82%

Basic and diluted earnings per share (Rupees)

 24.13

 53.40

-54.81%

 

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Posted on: 2020-04-27T13:34:00+05:00

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