UNITY sees significant reduction in profits by 37% YoY in 1HFY22

March 1, 2022 (MLN): Unity Foods Limited (UNITY) announced its financial result for 1HFY22 as per which the company witnessed a notable decline in its net profits of 37% to clock in at Rs975 million (EPS: Rs0.98) in IHFY22, compared to Rs1.56 billion (EPS: Rs1.88) in 1HFY21, the company filing on PSX showed today.

Going by the financial statement, the revenue of the company increased by 33% YoY to stand at Rs39.58bn. The jump in sales is due to a surge in edible oil prices on the back of higher international palm oil prices along with an increase in demand for consumer packs which is a high margin product.

The gross margins improved from 8.46% to 9.63%. This includes unrealized inventory gains also reported for the last quarter, contributing to the overall gross margins.

On the cost side, the company observed a significant increase of 87% YoY in its administrative expenses that stood at Rs305mn while the distribution expense inched up by 11% to Rs682mn in 1HFY22.

Meanwhile, the company also suffered an exchange loss of Rs1.06bn compared to the gain of Rs261mn during the same period last year.

Further damage was done by the finance cost which soared by 2.3 times YoY amid higher reliance on borrowings to meet working capital and capital expenditure requirements. Meanwhile, the company paid taxes worth Rs173.96mn.

Moreover, given high commodity prices and enhanced working capital requirements, the company had announced a rights issue of Rs5.4bn during the quarter under review. With the relentless support of the company’s shareholders, the company has successfully raised the said amount and is now geared to sustain and grow operations.

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