TREET swings to profit in 1HFY22

February 24, 2022 (MLN): Treet Corporation Limited (PSX: TREET) has posted a net profit of Rs341 million (EPS: Rs1.95) during 1HFY22, a turnaround from the same period last year when it incurred a net loss of Rs353mn (LPS: Rs1.98).

During the period under review, the company witnessed a growth of 8% YoY in topline as it went up to Rs7.75 billion. Meanwhile, the increase in the cost of sales was meagre therefore the gross margins expanded from 17.74% to 19.38%.

On the cost front, the administrative and distribution expenses dropped by 25.3% and 12.3% YoY to stand at Rs478mn and Rs290mn, respectively.

In addition, the finance cost of the company declined by 14.8% YoY to Rs457mn which also helped in strengthening the bottom line. However, the company booked a tax expense of Rs168mn during 1HFY22.

Treet has deleveraged itself by selling Global Art Limited and paying 30% of its debt to the bank, ahead of rising interest rates. The company is looking for debt re-profiling by converting ST borrowings (6bn) to LT debt out of which 50% (3bn) is already completed.

The company is planning for capital restructuring of FTMM to make equity positive and spin-off battery segment from FTMM into a separate company (IPO expected in next financial year). New Battery Company will be formed under a demerger scheme subject to approval from the high court in the next two months. NOC is already granted for the new company by SECP, a report by Foundation Securities noted. 

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