Nishat Mills Ltd: see-saw performance

Nishat Mills Limited (KSE: NML), the textile firm having 3 percent share in Pakistan’s total textile exports is expected to be one of the important beneficiaries of lately awarded GSP+ status to Pakistan. With the announcement of its recent financial result, NML seems to have upped its game.
During the period under review, NML financials saw significant strengthening in comparison to the corresponding nine month period. However, the weakening of domestic yarn prices and ambiguous international cotton prices in 9MFY14 affected the company’s yarn margin. This might have possibly diluted the incremental earnings impact of the grant of GSP+ status. However, better working capital management and reduction in borrowing rates contributed to the double-digit growth in bottomline.
Falling margins in 3QFY14 largely sum up the downstream of the textile firm’s dwindling performance, thus overall profitability for 3QFY14 was marred away, vis-à-vis the same period last quarter.
Rupee appreciation against the US dollar has caused the investors to shy away from many textile exports oriented sectors. NML seems devoted and determined to improve its strengths and develop strategies like utilising alternate energy resources, product diversification, new market development and achievement of efficiency in production. It seems that NML will cheer its shareholders in the coming months to come.

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NISHAT MILLS LIMITED

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Rs (mn)                  9MFY14   YoY chg   3QFY14   YoY chg

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Net sales                41,687        7%   13,599        8%

Cost of sales            34,694        8%   11,835       14%

Gross profit              6,993        6%    1,764      -21%

Distribution cost         1,953        5%      638        9%

Adminstrative cost          779        9%      259       -6%

Operating profit          4,260        5%      867      -37%

Finance cost              1,292        5%      463       16%

NPAT                      4,623       12%      770      -39%

EPS (Rs)                  13.15               2.19

Gross profit margin         17%                13%

Operating profit margin     10%                 6%

Net profit margin           11%                 6%

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Source: KSE notice

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