Pakistan Cables Limited (PCAL) showed a marginal decrease in its top line for FY16 with a drop of 2 percent in revenue as compared to the previous year. This is attributable to the dip in international prices of copper to which PCALs revenue is highly sensitive. The increased competition from domestic as well as Chinese competitors also played a role in this revenue dip. The company registered an impressive 25 percent increase in gross profit as compared to FY15. Marketing and distribution costs also rose by 37 percent indicating an aggressive marketing strategy and show the companys ambitions of expanding market share.
The combined effects of an increase in other income of 77 percent and almost 200 percent from share of profits from associate companies helped PCAL to register a remarkable 40 percent increase in its bottom-line as compared to FY15.
Financial charges were also reduced due to reduction in interest rates and lower inventory compared to the same period last year. The companys aim of a better sales mix coupled with higher volumes has been a key driver behind this remarkable increase in the bottom-line.
As there are various up gradation projects of electrical infrastructure by transmission companies and Discos PCAL will be able to increase sale of wiring and electrical cables the coming fiscal year.
Furthermore fast paced expansion in the cement and textile industries will allow the company to procure a large number of orders from these sectors.
However, with increased competition from international players especially Chinese players as well as domestic suppliers the company margins may be put under stress. Combined with declining or low copper prices this will certainly have an impact on overall sales value, which may be compressed despite growth in volumes.
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