Corporate Briefing Notes
Gul Ahmed Textile Mills Limited (GATM) held its corporate briefing session to discuss the financial results for 9MFY23 and its future roadmap.
● To recall, GATM reported an unconsolidated sales of PKR80bn in 9MFY23 as compared to PKR68bn in SPLY. While on a consolidated basis, total sales clocked in at PKR99.8bn against PKR83bn in 9MFY22.
● The company’s gross profit for the same period reached PKR11bn, reflecting a gross margin of 13.6%, respectively. The consolidated gross profit stood at PKR19bn, down 1.2% YoY compared to PKR19.1bn last year.
● The operating profit was reported at PKR6.7bn in 9MFY23. The overall operating profit was reported at PKR8.6bn, down 8.1% YoY compared to PKR9.3bn in the same period last year.
● The export sales culminated at PKR52.6bn (65.4% of total sales) in 9MFY23, while imports stood at PKR29.5bn during the same period.
● The export mix consisted of Home Textile (85%), Apparel (13%) and others (2%) during the noted period.
● Finance cost also increased to PKR3.2bn, constituting 4.0% of total sales. The overall finance costs stood at PKR4.4bn compared to PKR1.95bn during 9MFY22.
● The company announced bonus shares of 20% in the third quarter ending in March’23, along with an EPS of PKR4.27/sh during 9MFY23.
● Despite import restrictions and challenges with the opening of letters of credit (LC), the company managed to purchase 52% of total purchases from local sources by exploring local alternatives during the period.
● In terms of sustainability, the company imported 62% of sustainable raw materials in the said period. Moreover, 71% of the total steam is generated by WHRB (waste heat recovery boilers).
● The commitment to achieving Zero Liquid Discharge by 2027 has led the company to install wastewater recycling capacity, which can recycle 60% of total process effluents. Additionally, 200 tons per month are being recycled at the in-house waste recycling plant.
● Management emphasized on the reduction of short-term debt (subsidized lines of exports), which has already been reduced by PKR8bn and is planned to be further reduced by PKR7bn each in the upcoming two quarters. The total short-term debt reduction target is PKR21bn in the next two years. This target will be achieved by discounting bills and limiting expansion plans over the same year.
● Going-forward, GATM management is evaluating the GCC countries for increasing textile exports as these economies are growing rapidly. Discussing the rebound in export demand, management linked the recovery to worldwide inflationary pressures and government export policies. The management anticipates a return to normal demand after the second half of FY24. The company also expects promising cotton production this year.
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