MTL: Strong tractor sales keeping profits elevated

February 19, 2021 (MLN): Millat Tractors Limited (MTL), has reported a whopping 3.9x increase in net profits during 1HFY21 to Rs 2.94 billion compared to the profits of Rs 748 million in the corresponding period last year.

The earnings per share of the company clocked in at Rs 59.06/sh, skyrocketed by 293% YoY as opposed to Rs 15.01/sh reported in the same period last year.

The MTL is a market leader of tractor assemblers in Pakistan having above 60% market share. The Net sales of the company increased by 86% YoY due to volumetric growth of 68% YoY to 15,538 units compared to 9,228 units in the same period last year along with a surge in tractor prices and change in sales mix.

The growth in volumes attributable to excess export order, improving yields of farmers, and the announcement of subsidy on tractor sales tax by the government, which bodes well for the company.

Gross margins of the company were increased by 7ppts YoY to 26% on account of an increase in higher-margin on exports, PKR appreciation, economies of scale due to improvement in sales, and change in sales mix.

The other income of the company witnessed a significant jump of 199% YoY due to higher dividends from subsidiaries.

On the cost front, there was an upsurge noted in MTL’s Distribution, Marketing, and Admin expenses, however, it was somehow counterbalanced by the decline in financial charges as the better liquidity of the company drove down its finance cost by 77.5% YoY.

On the tax front, the effective tax rate of the company improved to 28% from 31% in the same period last year.

 

Consolidated profit and loss account for the Half-Year Ended December 31st, 2020 ('000 Rupees)

 

Dec-20

Dec-19

% Change

Sales- net

                     19,466,742

                     10,474,215

85.85%

Cost of sales

                     14,368,364

                        8,437,456

70.29%

Gross profit

                        5,098,378

                        2,036,759

150.32%

Distribution and marketing expenses

                           403,887

                           322,497

25.24%

Administrative expenses

                           436,092

                           378,099

15.34%

Other operating expenses

                           315,281

                           111,003

184.03%

 

                        1,155,260

                           811,599

42.34%

Other income

                           187,776

                              62,668

199.64%

Operating profit

                        4,130,894

                        1,287,828

220.76%

Finance costs

                              44,703

                           199,230

-77.56%

Profit before tax

                        4,086,191

                        1,088,598

275.36%

Taxation

                        1,143,345

                           340,507

235.78%

Profit for the period after tax

                        2,942,846

                           748,091

293.38%

Basic and diluted earnings per share (Rupees)

                                59.06

                                15.01

293.47%

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Posted on: 2021-02-19T15:20:00+05:00

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