Gul Ahmed Textile Mills Limited, a renowned textile manufacturer, has released its audited financial results for the fiscal year ending June 30, 2024. The results reflect the company’s performance across various financial indicators and highlight its operational strategies for maintaining stability in an evolving market.
Key Highlights from the Financial Results
1. Dividend & Corporate Actions:
The Board of Directors did not recommend any dividends, bonus shares, or right shares for the year 2024. This decision suggests the company may be conserving capital for reinvestment, debt repayment, or other strategic initiatives. Furthermore, there were no other corporate actions or entitlements declared.
2. Consolidated Financial Performance:
The consolidated financial performance, which accounts for Gul Ahmed’s subsidiaries and related entities, provides an overall picture of the group’s profitability.
- Net Sales: Gul Ahmed recorded a substantial increase in its consolidated net sales, reaching Rs. 172.48 billion for FY 2024, up from Rs. 138.93 billion in FY 2023. This growth of around 24% suggests strong demand for the company’s textile products.
- Cost of Sales: The cost of sales grew to Rs. 143.74 billion in FY 2024, up from Rs. 110.73 billion in the previous year. While sales have grown, the increase in cost of goods sold points to inflationary pressures and possibly higher raw material costs, which have eroded profitability.
- Gross Profit: Despite the increase in costs, Gul Ahmed maintained a gross profit of Rs. 28.74 billion in 2024, marginally higher than the Rs. 28.19 billion recorded in 2023. However, the profit margins have slightly narrowed due to increased operating costs.
- Operating Profit: Operating profit dropped to Rs. 12.22 billion in 2024 from Rs. 13.51 billion in 2023. This decrease is primarily attributed to the rise in selling and distribution costs (Rs. 10 billion) and administrative expenses (Rs. 5.95 billion), reflecting inflationary pressures and possible expansion initiatives.
- Other Income: Gul Ahmed reported other income of Rs. 2.16 billion, higher than the previous year’s figure of Rs. 805 million. This suggests that the company may have benefited from non-operational revenue streams, such as investments or sales of assets.
- Finance Costs: Finance costs remained significant, standing at Rs. 7.66 billion, marginally higher than the Rs. 7.32 billion in 2023. This indicates that the company continues to carry a significant debt load, and rising interest rates may have contributed to the increase.
- Profit After Tax: The company’s profit after tax was Rs. 4.85 billion for 2024, almost flat compared to the previous year’s profit of Rs. 4.90 billion. This stabilization, despite rising costs, highlights the resilience of the company’s operations.
- Earnings Per Share (EPS): The EPS stood at Rs. 6.57, a slight decline from Rs. 6.62 in 2023, reflecting marginally lower profitability per share.
3. Separate Financial Performance:
The separate financials present Gul Ahmed’s results excluding its subsidiaries, offering insights into the core operations of the parent company.
- Net Sales: On a standalone basis, Gul Ahmed recorded Rs. 143.15 billion in sales, up from Rs. 111.97 billion in 2023. The standalone sales growth of about 28% is a positive indicator of the company’s core textile business.
- Cost of Sales: Cost of sales rose to Rs. 125.95 billion, reflecting similar inflationary pressures as in the consolidated accounts.
- Gross Profit: The company’s gross profit increased slightly to Rs. 17.19 billion, up from Rs. 16.70 billion the previous year.
- Operating Profit: Gul Ahmed reported an operating profit of Rs. 9.98 billion in 2024, a decrease from Rs. 10.63 billion in 2023. Similar to the consolidated results, this decline is attributed to rising costs in selling, distribution, and administrative activities.
- Profit After Tax: The profit after tax on a standalone basis was Rs. 4.73 billion, a significant improvement over Rs. 3.99 billion in 2023. This increase demonstrates the company’s ability to maintain strong profitability in its core business.
- Earnings Per Share (EPS): The standalone EPS increased to Rs. 6.39 from Rs. 5.39 in 2023, reflecting better returns from the core operations.
Analysis and Takeaways:
1. Revenue Growth Amid Rising Costs:
Gul Ahmed has shown commendable growth in its revenue across both consolidated and separate accounts. The notable sales increase reflects robust market demand for the company’s textile products and likely expansion into new markets or customer segments. However, the rise in the cost of sales has pressured profit margins. Inflationary trends in raw materials, energy, and logistics may have contributed to this increase, requiring the company to adopt cost-control measures moving forward.
2. Stable Profitability:
Despite rising costs, Gul Ahmed has managed to maintain profitability. While the operating profit has slightly declined, the company’s net profit remained stable, reflecting sound financial management and the benefits of diversified income streams. The flat EPS suggests that shareholders can expect steady returns, but there may be room for improvement if the company can manage its costs better in the future.
3. No Dividend Payout:
The decision not to declare any dividends or bonus shares indicates a conservative capital allocation strategy. It’s possible that Gul Ahmed is reinvesting its profits back into the business for further growth or using the funds to reduce its debt burden. This could be a strategic move given the current economic environment, but it may disappoint some investors looking for immediate returns.
4. Cost Control a Key Priority:
With the rise in operating expenses, particularly in selling, distribution, and administrative costs, it is clear that cost control will be critical to sustaining profitability. While the company has shown strong sales growth, it will need to implement efficiency measures to improve margins and enhance long-term shareholder value.
5. Future Outlook:
Gul Ahmed’s performance in 2024 demonstrates its resilience and ability to grow in a challenging market environment. With solid revenue growth and stable profitability, the company is well-positioned to capitalize on future opportunities. However, managing rising costs and reducing finance expenses will be essential to improving profitability and delivering better returns to shareholders.
In conclusion, Gul Ahmed Textile Mills Limited has delivered a stable financial performance for FY 2024. The company’s strong sales growth is a positive indicator of its market position, though rising costs have tempered profit growth. With strategic focus on cost management and capital reinvestment, Gul Ahmed is likely to maintain its competitive edge in the textile industry while seeking new avenues for growth.