Dawood Lawrencepur Limited (KSE: DLL) was incorporated as a public limited company on 2004 by the amalgamation of Lawrencepur Woolen and Textile Mills Limited, Dawood Cotton Mills Limited Burewala Textile Mills Limited and Dilon Limited. The registered address of the company is Dawood house, Karachi.
DLL is involved in the manufacture and sale of fabrics made from natural and man-made fibers and blends. The company is also engaged in the business of trading and marketing renewable energy solutions, primarily solar, to domestic and industrial consumers. Its subsidiary company, Tenaga Generasi Limited is primarily engaged in business of power generation using wind energy.
PERFORMANCE 9M FY14 During the period 1H CY14, the rupee appreciated against the dollar at nearly 10 percent that adversely affected the exports sales of the company. Nonetheless, net sales of the company have bounced back to a certain degree over last year and increased by 334.8 percent in 1H CY14. Textiles sales, shown in discontinued operations, were Rs 37.96 million as compared to Rs 75.84 million for the comparable period of last year, consistent with expectation given the difficult competitive landscape of the deteriorating fabric industry.
The gross profit margin also improved on account of a better sales mix. However, the operating loss of the company increased to Rs 94 million as compared to a loss of Rs 19 million for the same period of last year attributing to upsurge in expenses. Stresses have been witnessed with administrative costs and distribution expenses and some pressure was added by increase in finance costs during the period under review, which was due to the firm's high short-term debt obligations.
Fading profits have led to decline on the return on shareholders' equity to 5.9 percent in 1H CY14. The current ratio of DLL is 1.73. In 1H FY14, the inventory reported for 47 percent of the firm's current assets Earnings per share on a standalone basis for the half year were Rs 2.92 per share as compared to Rs 0.24 per share in 1H CY13.
FUTURE OUTLOOK The textile sector manufacturing environment is projected to remain challenging given the surge in energy and natural fiber costs. However, the firm is optimistic that the effort brought about by licensing the brand will result in enhanced market presence, brand image and future profitability.
The management of DLL intends to dispose of its textiles assets over the period of next few years, with the aim of bringing the best suitable cessation to a business that subjugated the industry for decades. In this regard, DLL has sold one of its legacy assets at a significant profit resulting in income of Rs 224.9 million from discontinued operations as compared to a loss of Rs 54.69 million last year. Nevertheless, DLL plans to continue reaping the benefits from the 'Lawrencepur' brand over the years to come through its licensing arrangement. Moreover, DLL is assertively concentrating on its strategic interest in the renewable energy business, research activity for which has already been initiated.
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1HCY12 1HCY13 1HCY14
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Profitability
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Gross profit margin 16.7% 22.7% 14.1%
Operating profit margin -5.7% -138.2% -156.9%
Net profit margin 50.2% 499.9% -86.8%
ROE 6.6% - -5.1%
ROA 5.8% - -3.5%
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Liquidity
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Current ratio 8.85 - 1.71
Quick ratio 6.33 - 1.63
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Turnover
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Total asset turnover 0.12 - 0.04
Fixed asset turnover 4.11 - 1.21
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Market
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EPS - Rs 0.25 -0.93 3.81
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Source: Company accounts
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