SEARL’s profits drop by 13.6% owing to higher effective tax rate

February 28, 2020 (MLN): The Searle Company Limited (SEARL)’s net profitability has decreased by 13.6% YoY to Rs 1.13 billion from Rs 1.3 billion in six months period ended on December 31^st 2019.

 This has reflected into earnings per share which dropped from Rs 6.12 per share to Rs 5.24 per share.

The decline in profitability is attributable to the rise in input cost owing to abrupt rupee devaluation, higher inflation, higher financial charges and effective tax rate during the period.

The revenues of the company surged by 12.7% YoY to Rs 9.8 billion from Rs 8.7 billion due to higher volumetric growth.  Moreover, the new pricing policy has provided significant relief to the industry, however, company’s gross margins were still on a declining side as it dropped from 50.4% to 48.68% due to rise in the cost of sales by a greater percentage than revenues.

Furthermore, the company witnessed a considerable increase in income from other sources by 214.59% which provided comfort to the earnings.

Going forward, the profitability of the company is likely to improve as the company already announced acquisition of OBS Pakistan Pvt Limited which would be enough to boost company revenues.

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