NCL’s profits nosedive by 35% owing to absence of exchange gain

MG News | February 27, 2020 at 04:04 PM GMT+05:00

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February 27, 2020 (MLN): Nishat (Chunian) Limited (NCL) has reported 35.2% YoY decline in its net profits to Rs 2.2 billion for the six months ended on December 2019 against Rs 3.45 billion earned in the same period of last year.

This has translated in to earnings per share which exhibited a decline of 52.4% from Rs 10.60 per share to Rs 5.04 per share.

The decline in NCL’s profits is mainly on the back of substantial decline in Other income (-93%) which was abnormally high in the corresponding period of last year due to one-off gain on sale of subsidiary (entertainment business) and exchange activities.

Moreover, financial charges which rose by Rs 957.8 million further put a limit on company’s profitability.

Besides, Net sales of the company remained subdued as it only recorded a marginal increase. The increase was driven by exports of yarn as the company generate around 60% of its revenue from yarn sales. Whereas, gross margins of the company jumped from 91% to 21% on account of decline in cost of sales by around 2%.

Profit and Loss Statement for the half-year ended December 31st 2019 (Rupees)
	Dec-19	Dec-18	% Change
Sales	28,268,942,148	27,998,262,170	0.97%
Cost of Sales	(22,373,783,229)	(22,762,105,670)	-1.71%
Gross Profit	5,895,158,919	5,236,156,500	12.59%
Distribution Cost	(559,053,494)	(557,926,532)	0.20%
Administrative expenses	(275,459,042)	(239,460,657)	15.03%
Other expenses	(72,807,169)	(110,926,343)	-34.36%
Other income	68,829,462	1,013,377,026	-93.21%
Finance cost	(2,565,703,173)	(1,607,868,229)	59.57%
Profit before taxation	2,490,965,503	3,733,351,765	-33.28%
Taxation	(254,663,092)	(280,623,354)	-9.25%
Profit for the year	2,236,302,411	3,452,728,411	-35.23%
Earnings per share - basic and diluted (Rupees)	5.04	10.60	-52.45%

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