Nishat Mills (NML), Pakistan's largest textile mill, announced FY14 unconsolidated earnings of Rs 5.51 billion (EPS Rs 15.68) compared to Rs 5.85 billion (EPS Rs 16.63) last year, down 5.7 percent. The result is also accompanied with final cash dividend of Rs 4.0/share (FY13 EPS Rs 4).
According to Topline Securities, sales of the company grew by 3.8 percent to Rs 54.44 billion compared to Rs 5 2.43 billion in FY13. Cost of sales increased by 7.4 percent to Rs 46.58 billion in FY14. Thus, gross profits declined by 13.1 percent to Rs 7.86 billion while gross margins declined by 281bps to 14.4 percent in FY14 compared to 17.3 percent last year.
Other income of the company increased to Rs 3.7 billion in FY14 compared to Rs 2.7 billion last year, up 33.4 percent. During the year, dividend income of NML is estimated to increase by 31 percent to Rs 2.9 billion from its investment portfolio. Currently, value of NML investment portfolio is estimated at Rs 49.9 billion (Rs 142/share). On the other side, finance cost remained stable at Rs 1.6 billion.
During 4QFY14, sales of the company fell by six percent YoY to Rs 12.76 billion while cost of sales surged by seven percent YoY to Rs 11.89 billion. As a result, gross margins squeezed to 6.8 percent, drop of 615bps in 4QFY14. "We feel power tariff hikes and PKR appreciation against US dollar caused the deterioration," said Muhammad Tahir Saeed analyst at Topline. However, support to profits came from handsome rise in other operating income to Rs 1.18 billion (up 47.5 percent YoY), he added.
NML posted PBT of Rs 873.3 million in 4QFY14. Excluding other income, NML would have posted loss before tax of Rs 309.1 million. The company posted earnings of Rs 889 million (EPS Rs 2.53) in 4QFY14 compared to Rs 1.73 billion (EPS Rs 4.94) in the same period last year, down 49 percent. On quarter-on-quarter basis, NML posted 15 percent increase in earnings from Rs 771 million (EPS Rs 2.19) in 3QFY14, he informed.