Mughal Iron & Steel Industries Limited, a major player in the steel sector, has released its financial results for the fiscal year ending June 30, 2024. The company’s results highlight both its operational performance and strategic financial moves during the year.
Key Highlights from the Profit or Loss Statement:
- Gross Sales: The company posted a robust gross sales figure of PKR 105.55 billion for 2024, significantly higher than the previous year’s PKR 76.49 billion, representing strong growth.
- Sales Tax: Sales tax for the year amounted to PKR 13.13 billion, which was also higher than last year’s PKR 9.09 billion, reflecting the company’s increased sales activity.
- Net Sales: After adjusting for commissions and taxes, the company achieved net sales of PKR 92.38 billion in 2024, compared to PKR 67.39 billion in 2023, a substantial increase.
- Cost of Sales: The cost of sales saw an increase from PKR 57.71 billion in 2023 to PKR 84.66 billion in 2024, largely due to increased production activities and material costs.
- Gross Profit: The gross profit for 2024 stood at PKR 7.71 billion, down from PKR 9.67 billion in 2023. This reduction in profit margin suggests that while sales increased, the company faced higher production costs, which squeezed profitability.
Operational Expenses:
- Sales and Marketing Expenses: These expenses increased to PKR 207.28 million in 2024 from PKR 155.13 million in 2023.
- Administrative Expenses: Administrative costs rose to PKR 858.09 million, up from PKR 682.09 million in 2023, indicating increased operational expenditure.
- Other Charges: The company recorded other charges of PKR 85.11 million for the year.
- Allowance for Expected Credit Losses: Interestingly, the company reversed some of its earlier provisions for credit losses, posting a recovery of PKR 60.44 million in 2024, compared to a charge of PKR 34.44 million in 2023.
- Finance Cost: The finance cost saw a sharp increase, rising to PKR 6.36 billion from PKR 4.42 billion in the previous year, which may reflect the impact of borrowing for working capital or expansion purposes.
Profit Before Taxation:
Despite the increased revenue, the company faced a loss before taxation of PKR 708.69 million in 2024, compared to a profit of PKR 4.34 billion in 2023. This significant shift from profitability to loss can be attributed to the higher cost of sales, increased operational expenses, and finance costs.
Taxation and Final Profit:
The total taxation for the year was PKR 490.95 million. After accounting for taxes, Mughal Iron & Steel recorded a net profit of PKR 1.99 billion, a sharp decline from the previous year’s profit of PKR 3.48 billion.
Earnings Per Share:
The company’s earnings per share (EPS) for 2024 dropped to PKR 5.96 from PKR 10.37 in 2023, reflecting the decrease in overall profitability.
Board’s Recommendations:
In a letter addressed to the Pakistan Stock Exchange dated September 20, 2024, the Board of Directors of Mughal Iron & Steel Industries Limited announced several key decisions regarding entitlements for the shareholders:
- Cash Dividend: The Board recommended no cash dividend for the year.
- Bonus Shares: There will be no issuance of bonus shares.
- Right Shares: The company decided not to issue any right shares.
- Other Corporate Actions: The Board did not announce any other price-sensitive actions or entitlements.
Conclusion:
Mughal Iron & Steel Industries Limited exhibited strong sales growth in 2024, but higher production and finance costs significantly impacted its profitability. While the company’s net sales grew impressively, the resulting financial figures reflect the challenges it faced in managing its costs and maintaining profit margins. The lack of dividend payouts and other entitlements could suggest the company is retaining earnings for reinvestment or to manage liquidity in a challenging market environment. The board’s conservative approach may be an indication of caution amid economic uncertainties or planned strategic investments in the near future.
Source: PSX