Biafo Industries Limited has released its financial results for the year ending June 30, 2024, showing a mixed performance compared to the previous fiscal year. The company experienced declines in revenue, profitability, and earnings per share (EPS), attributed to several operational and financial factors.
Decline in Revenue and Gross Profit
The company’s net revenue for FY 2024 stood at Rs. 2.41 billion, down from Rs. 2.71 billion in FY 2023. This decline of over Rs. 300 million signals potential challenges in market demand, competitive pressures, or external macroeconomic factors that affected sales. As a result, gross profit dropped from Rs. 1.18 billion in 2023 to Rs. 1.01 billion in 2024. While Biafo managed to lower its cost of sales from Rs. 1.53 billion to Rs. 1.39 billion, the drop in sales overshadowed these cost efficiencies.
Rising Expenses Impact Operating Profit
While the company successfully controlled its cost of sales, other expenses significantly impacted profitability. Distribution expenses increased from Rs. 68.38 million in 2023 to Rs. 88.57 million in 2024. Additionally, administrative expenses saw a notable rise, growing from Rs. 183.11 million to Rs. 217.65 million. This escalation in operating costs, combined with net impairment losses on financial assets amounting to Rs. 269.80 million, dragged down the company’s operating profit, which fell sharply from Rs. 876.48 million in 2023 to Rs. 449.80 million in 2024.
Impact of Finance Costs and Net Profit
One of the most significant changes in Biafo’s financial performance was the increase in finance costs, which rose from Rs. 76.43 million in FY 2023 to Rs. 109.36 million in FY 2024. Additionally, a sharp reduction in finance income from Rs. 102.60 million in 2023 to Rs. 33.63 million in 2024 resulted in a net finance cost of Rs. 75.72 million—a dramatic reversal from the net finance income of Rs. 26.17 million seen in the previous year. This shift may be attributed to higher debt servicing costs or reduced income from financial investments, significantly affecting the company’s bottom line.
The combined effect of these challenges led to a major reduction in profit before tax, which dropped to Rs. 348.04 million from Rs. 839.82 million in 2023. After accounting for final tax expenses, Biafo reported a net profit after tax of Rs. 295.03 million, down by more than 50% compared to the previous year’s figure of Rs. 607.68 million.
Earnings Per Share Drop
As a result of lower profitability, earnings per share (EPS) for FY 2024 fell to Rs. 6.36, down from Rs. 13.10 in FY 2023. This decline reflects the reduced returns for shareholders due to the company’s weaker performance during the year.
Conclusion
Biafo Industries Limited faced significant challenges in FY 2024, with declining revenues, rising operational costs, and increased finance charges contributing to a marked drop in profitability. While the company managed to reduce its cost of sales, this was not enough to offset the broader financial pressures it encountered. Going forward, Biafo will need to address these challenges, particularly in managing its operating expenses and finance costs, to restore profitability and shareholder value.