Systems Limited in full bloom

April 28, 2023 (MLN): The net profits of System Limited (PSX: SYS) ascended dramatically during the quarter that ended on March 31, 2023, observing over threefold surge to clock in at Rs3.88 billion compared to Rs1.2bn in the same period last year.

This remarkable growth may be attributed to an upsurge in revenue and exchange gains related to other income which translated into basic earnings per share of Rs13.36 during 1QCY23 as compared to Rs4.33 in 1QCY22.

According to the financial statement sent to PSX, the topline witnessed a 2x YoY jump amid a higher influx of orders from all regions including Europe, North America, and the Middle East along with PKR depreciation. However, higher cost of sales that surged by 2.11x YoY squeezed gross margins to 26.08% compared to 29.98% in 1QCY22.

On the cost front, SYS’s distribution and administration expenses jumped by 2.7x YoY and 80.7% YoY to stand at Rs347mn and Rs785mn, respectively, in the review period.

Notably, the other income of the company clocked in at Rs2.55bn in 1QCY23, showing an increase of 7.6x YoY. The increase in other income is due to exchange gain on the translation of foreign currency-denominated assets as the rupee depreciated during the said period.

Further, the finance costs went up by 4.7x YoY to Rs157mn in the said period on the back of higher interest rates.

On the tax front, the effective tax rate clocked in at 2.83% as compared to 2.17% in 1QCY22.

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