Sitara Peroxide: Higher input cost hurts profitability

September 27, 2021 (MLN): Sitara Peroxide Limited (SPL) announced its FY21 results today, as per which the company posted profits after tax of Rs34.7mn which was 53% YoY lower than the profits of Rs74.26mn in FY20.

This translated into the company’s earnings per share which nosedived from Rs1.35/sh in FY2) to Rs0.68/sh in FY21.

Despite better downstream demand for hydrogen peroxide (H202) from the textile sector which is the major consumer of hydrogen peroxide, and new contracts agreements from food and paper & pulk industries, the lower H202 prices and higher cost pressures kept the earnings in check.

During the year, net revenues of the company increased slightly by 7% YoY to Rs1.86bn mainly backed by an increase in sales volume due to high demand from the textile sector.

The gross margin of the company clocked in at 10% compared to 19% in the previous year. The decline is mainly attributed to lower prices of hydrogen peroxide during the FY21 and higher RLNG costs.

With regards to major expense heads, the company’s admin expenses surged by 22% YoY while its distribution expense increased by 15% YoY to Rs93mn as this segment is connected to the topline of the company.

Moreover, amidst lower interest rates, the financial charges of the company were reduced by 41% YoY to Rs48.5mn. On the other hand, the Other income improved by 2.7x YoY to Rs128mn.

The company also booked impairment loss on financial assets worth Rs28.3mn which was 12 times higher than the loss incurred in the previous year.

On the tax front, SPL observed a tax incentive of Rs21mn against tax payments of Rs14.7mn in FY20.

Profit and Loss Statement for the year ended June 30, 2021 (Rupees)

 

Jun-21

Jun-20

% Change

Sales

           1,865,396,616

           1,745,355,899

7%

Cost of Sales

         (1,674,177,794)

        (1,422,134,718)

18%

Gross Profit

               191,218,822

              323,221,181

-41%

Distribution Cost

               (92,656,845)

              (80,533,486)

15%

Impairment loss on financial assets

               (28,294,850)

                 (2,359,609)

1099%

Administrative expenses

             (134,425,562)

            (110,541,513)

22%

Other expenses

                 (1,993,506)

                 (6,529,154)

-69%

Finance Cost

               (48,502,296)

              (81,996,213)

-41%

Other income

               128,307,176

                 47,713,943

169%

Profit before taxation

                 13,652,939

                 88,975,149

-85%

Taxation

                 21,055,400

              (14,713,173)

-243%

Profit after taxation

                 34,708,339

                 74,261,976

-53%

Earnings per share- basic and diluted

                              0.63

                              1.35

-53%

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Posted on: 2021-09-27T16:43:18+05:00

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