Millat Tractors Limited (MTL) has reported a growth of 49 percent in its net profit and declared a final dividend of Rs 8 per share for the year ended June 30, 2004.
The Profit After Tax (PAT) of the Company surged to Rs 394.62 million against Rs 265.61 million of last year. The Company has also announced a final cash dividend of Rs 5 per share (in addition to the interim dividend of Rs 8 per share already paid by the Company).
This has pushed the year's cash dividend to Rs 13 per share against Rs 16 per share of last year.
The Board of Directors has also recommended a bonus issue in the proportion of one share for every two shares held ie 50 percent. Last year, the Company did not give any bonus issue.
According to a report of Arif Habib Securities, during FY04, the top line of the Company witnessed an exceptional growth of 32.77 percent mainly on the back of surging tractor sales fuelled by increased agricultural lending at lower rates, improved support prices of food products and strong GDP growth rates.
The net sales for the period amounted to Rs 6,984.92 million against Rs 5,260.78 million of the corresponding period, last year.
The Company reaped the dividends of the growth in its top line in the form of higher trading profits, which climbed by Rs 194.93 million to Rs 227.531 million as compared to Rs 194.94 million reported during the same period last year--a growth of 16.72 percent.
However, the gross margin of the Company for the period declined by 27 bps to 12.13 percent during FY 03-04 from 12.40 percent reported during the last year.
The operating profits for the year stood at Rs 619.805 million against Rs 457.47 million reported last year posting a growth of 35.49 percent.
Substantial decline was witnessed in the financial charges of the Company, which dropped by 23.68 percent to Rs 70.694 million against Rs 92.631 million reported last year.
The pre-tax profit for the year stood at Rs 595.342 million against Rs 410.086 million last year, recording an increase of almost 45.17 percent. Resultantly, the net margins of the Company surged by 60 bps to 5.65 percent against 5.05 percent last year.
The Profit After Tax of the Company for the financial year ended June 30, 2004 stood at Rs 394.622 million against Rs 265.608 million, reported last year translating into an EPS of Rs 49.27 against Rs 33.16 last year.
TRACTOR SALES AND PRODUCTION: According to the latest figures released by the Pakistan Automotive Manufacturers Association (PAMA), the year FY04 saw the production and sales of tractors move upwards aggressively.
During FY 2003-04 a total of 35,770 tractors were produced against 26,832 tractors produced during the last year - an increase of 33.31percent. Meanwhile, sales during the period climbed to 35,900 tractors.
Millat Tractors Limited is the sole marketer of five variants of Massey Ferguson brand of tractors, ranging in power from 50 HP to 85 HP and in price (excluding GST) from Rs 320,000 to Rs 890,000. PAMA figures reveal that a total of 19,012 Massey Ferguson tractors were sold during FY04 against 14,013 tractors of the same brand sold last year - an increase of 34.81 percent in sales.
MTL has posted an impressive result for FY 2003-04. However, the future of the tractor sector still rests on the government's polices for the agricultural sector.
The recent weakening of the rupee against major international currencies, including the British pound (causing an increase in the price of CKD kits), surging international steel prices and measures adopted in Budget 2004-05 that facilitate the import of tractors with engine power less than 30HP and more than 100 HP with a 20 percent duty are likely to affect the Company's sales in the future.
In addition, the price increase given to its local vendors by the MTL effective from January 1, 2004 is also not likely to reflect positively on the Company's profits in the years to come.
According to reports, MTL is all set to increase the prices of its tractors. The Company has attributed this planned increase to escalating cost of production and the weakening of rupee against the British pound. Last time, the Company fixed its tractor price was in the middle of year 2002, the report said.