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Business Recorder
12 hours ago
- Business
- Business Recorder
Mughal Iron & Steel Industries Limited
Mughal Iron & Steel Industries Limited (PSX: MUGHAL) was incorporated in Pakistan as a public limited company in 2010. The company is engaged in the manufacturing and sale of mild steel products related to ferrous segments. MUGHAL also deals in non-ferrous segments. Pattern of Shareholding As of June 30, 2024, MUGHAL has a total of 335.634 million shares outstanding which are held by 6014 shareholders. Directors, CEO, their spouse and minor children have the majority stake of 43.20 percent in the company followed by associated companies, undertakings and related companies holding 32.16 percent shares. Local general public accounts for 7.06 percent of MUGHAL's shares while Modarabas & Mutual Funds hold 5.83 percent shares. Around 5.16 percent of MUGHAL's shares are held by Banks, DFIs and NBFIs and 1.911 percent by the insurance companies. The remaining shares are held by other categories of shareholders. Financial Performance (2019-24) Except for a year-on-year dip in 2020, MUGHAL's topline rode an upward trajectory over the period under consideration. However, its bottomline dipped in 2019, 2023 and 2024. The company's margins which declined until 2020 registered a significant turnaround in 2021 and 2022 only to level down in the subsequent years. The detailed performance review of the period under consideration is given below. In 2019, MUGHAL's topline grew by 38.70 percent year-on-year to clock in at Rs. 30,828.09 million. This was the result of combination of higher sales volume as well as improved prices. The economic parameters of the country had been deteriorating in 2019 which was evident from rising interest rates, elevated inflation level as well as Pak Rupee depreciation. The government had considerably curtailed the PSDP budget which could dent MUGHAL's off-take, however, 34 percent low PSDP spending was decently counterbalanced by booming demand in the housing sector. This was on account of increasing population and the emergence of nuclear families. Escalating input prices resulted in a plunge in GP margin from 12.57 percent in 2018 to 10.34 percent in 2019, despite 14.12 percent bigger gross profit recorded by the company in 2019. Selling & distribution expense slid by 18.16 percent in 2019 on account of lower advertising and sales promotion expense as well as freight charges incurred during the year. Conversely, administrative expense enlarged by 17.24 percent year-on-year in 2019 which was the consequence of an increase in the number of employees from 772 in 2018 to 1127 in 2019. Higher profit related provisioning resulted in 8.62 percent hike in other expense in 2019 while other income shrank by 17.50 percent on account of lower interest income. MUGHAL recorded 17.11 percent higher operating profit in 2019, however, its OP margin diminished from 9.71 percent in 2018 to 8.20 percent in 2019. Finance cost magnified by 42.33 percent in 2019 on account of hiking discount rates as well as increased long-term financing for various BMR projects and short-term financing to meet working capital requirements. MUGHAL's gearing ratio spiraled from 54 percent in 2018 to 64 percent in 2019. The company recorded 6.41 percent rise in its net profit which clocked in at Rs.1372.93 million in 2019 with EPS of Rs.5.46 versus EPS of Rs.5.13 posted in 2018. However, NP margin plummeted from 5.81 percent in 2018 to 4.45 percent in 2019. MUGHAL's topline nosedived by 11.4 percent year-on-year in 2020 to clock in at Rs. 27,304.99 million. This was the consequence of lower sales volume due to disruption of operational activities during the lockdown period. At the onset of 2020, the economy had started moving towards stability with a rebound in business confidence; however, the outbreak of COVID-19 came as a shock and changed the entire paradigm of the local and global economies. During the year, the company's gross profit diminished by 17.92 percent year-on-year with GP margin moving down to 9.59 percent as the company couldn't pass on the effect of cost hike to its consumers. Selling & distribution expense eroded by 28.63 percent in 2020 due to lower advertising budget and freight outward incurred during the year. During 2020, MUGHAL expanded its workforce to 1661 employees resulting in higher payroll expense which drove up the administrative expense by 10.95 percent in 2020. 56.72 percent decline in other expense was due to lower profit related provisioning. Other income mounted by 95.97 percent in 2020 due to higher interest income. Despite keeping a check on its operating expense, operating profit contracted by 18 percent in 2020 with OP margin slipping to 7.59 percent. Finance cost enlarged by 92.64 percent in 2020 on account of higher discount rate for most part of the year, increase in average outstanding borrowings as well as exchange loss on foreign currency borrowings due to Pak Rupee depreciation. MUGHAL's net profit marched down by 56.82 percent year-on-year in 2020 to settle at Rs.592.87 million with EPS of Rs.2.25 and NP margin of 2.17 percent. With 64.70 percent year-on-year boost in its topline, 2021 marked a significant year of revival for MUGHAL. Net sales clocked in at Rs. 44,971.84 million. The staggering growth was the consequence of increase in both prices and sales volumes in ferrous and non-ferrous segments. The government provided incentives to the construction industry during the year. Moreover, monetary easing also provided impetus for a noticeable rise in housing finance. This greatly fueled the demand in the allied industries such as steel and cement. During 2021, MUGHAL's gross profit improved by 155.64 percent as the company acquired cheap inventory when the prices were low. This resulted in significant inventory gain. GP margin reached up to 14.88 percent in 2021. Selling & distribution expense spiked by 76.74 percent in 2021 due to higher freight and advertising expense incurred. The company expanded its workforce to 1971 employees as it commenced it bar re-rolling plant during the year which required additional employees. This resulted in 32.15 percent higher administrative expense incurred during the year. Other expense made a massive jump of 609.55 percent in 2021 on account of profit-related provisioning as well as provision booked for doubtful debts. Operating profit magnified by 169.65 percent in 2021 with OP margin clocking in at 12.42 percent. Finance cost ticked down by 9.54 percent in 2021 due to reduction in foreign exchange loss during the year. MUGHAL's net profit spiraled by 478.40 percent in 2021 to clock in at Rs.3429.15 million with EPS of Rs.11.16 and NP margin of 7.63 percent. MUGHAL's growth trajectory continued in 2022 with 47.10 percent year-on-year rise in its topline which clocked in at Rs.66,152.81 million. The increase in topline was primarily the result of price revision. The sales volume of ferrous segment inched down in 2022 due to a standstill in the construction activity in the country owing to political turmoil, unprecedented level of discount rate, high inflation, Pak Rupee depreciation and soaring commodity prices on account of Russia-Ukraine war. Non- ferrous segment registered an increase in sales volume which majorly included exports to PRC. Effective inventory management enabled MUGHAL to overshadow the adverse impact of the aforementioned economic conditions. This resulted in 51.36 percent bigger gross profit recorded by the company in 2022 with GP margin reaching its optimum level of 15.31 percent. Selling and distribution expense was streamlined by 3.42 percent in 2022 which was in line with inflation and increase in logistics cost due to hike in petroleum prices. Administrative expense increased by 31.1 percent in 2022 mainly on account of rise in salaries due to increase in the number of employees to 2197 coupled with the adjustment of minimum wages. 40.47 percent higher other expense incurred in 2022 was the result of higher profit-related provisioning as well as exchange loss. Other expense was partially offset by 219.31 percent rise in other income which was the result of commission against corporate guarantees, sales tax adjustment as well as claims against materials supplied to the company. Operating profit got 58.55 percent bigger in 2022 with OP margin touching an incomparable level of 13.39 percent. 91.36 percent bigger finance cost incurred in 2022 was the consequence of higher discount rate as well as increased overall borrowings. MUGHAL's net profit stood at Rs.5410.96 million in 2022, up 57.79 percent year-on-year with EPS of Rs.16.12 and NP margin of 8.18 percent. In 2023, MUGHAL's topline posted a paltry 1.9 percent year-on-year growth to clock in at Rs.67,390.17 million. The topline growth was merely price led while overall volumes declined. Political turmoil in the country, devastating floods, import restrictions, global commodity super cycle and drastically declining value of Pak Rupee, high inflation and discount rates etc took a heavy toll on industrial and construction activity in the country. Gross profit dropped by 4.51 percent year-on-year with GP margin sliding down to 14.35 percent in 2023 on the back of high cost of sales. Selling & distribution and administrative expense took a slide of 36.84 percent and 3.24 percent respectively in 2023. This was on account of lower advertisement budget and curtailed payroll expense respectively. Other expense plummeted by 33.63 percent in 2023 as a result of lower profit related provisioning in line with reduced profitability. Other income grew by 51.87 percent in 2023 on account of higher interest income, gain on disposal of tangible fixed assets as well as higher net foreign exchange gain. Operating profit slipped by 0.6 percent in 2023 with OP margin clocking in at 13.06 percent. Finance cost mounted by 68.69 percent in 2023 on account of higher discount rate. MUGHAL's net profit eroded by 35.68 percent in 2023 to clock in at Rs.3480.49 million with EPS of Rs.10.37 and NP margin of 5.16 percent. In 2024, MUGHAL posted year-on-year growth of 37 percent in its topline which clocked in at Rs.92,382.60 million. During the year, both ferrous and non-ferrous sales increased by 47.01 percent and 14.30 percent respectively. This was the result of increase in both prices and volumes during the year. Cost of sales mounted by 46.68 percent in 2024 due to high energy cost and raw material prices. This squeezed gross profit by 20.20 percent in 2024 with GP margin hitting its lowest level of 8.35 percent. Selling expense mounted by 33.62 percent in 2024 due to higher advertisement budget as well as export related expenses incurred during the year. Administrative expense surged by 25.80 percent in 2024 due to higher payroll expense as well as fee & subscription charges related to the issuance of various Sukuk transactions. The company streamlined its workforce from 2250 employees in 2023 to 2216 employees in 2024. Other expense plunged by 75.95 percent in 2024 due to considerably lower provisioning done for WWF and WPPF. Other income ticked up by 9.64 percent in 2024 due to higher profit on saving accounts, gain on sale of store items, balances written back and finance income recognized on loan granted to a subsidiary company, Mughal Energy Limited. MUGHAL recorded 21.37 percent thinner operating profit in 2024 with OP margin falling down to 7.49 percent. Finance cost mounted by 43.88 percent in 2024 due to higher discount rate and increased short-term borrowings. This resulted in gearing ratio of 56.96 percent in 2024 versus gearing ratio of 50.61 percent recorded in 2023. During the year, MUGHAL also booked reversal of allowance booked for ECL to the tune of Rs.60.45 million. This was against the allowance for ECL booked in the rest of the year. MUGHAL's net profit descended by 42.54 percent to clock in at Rs.1999.89 million in 2024. This translated into EPS of Rs.5.96 and NP margin of 2.16 percent in 2024. Recent Performance (9MFY25) During the nine months of the ongoing fiscal year, MUGHAL's net sales tumbled by 1.44 percent to clock in at Rs.66,168.14 million. This was on account of 23 percent year-on-year drop recorded in the sales of non-ferrous segment due to lower sales volume recorded in both local and export markets during 9MFY25. The decline in the sales of non-ferrous segment was in line with the company's strategic shift towards the ferrous segment. The company also curtailed the business of its non-ferrous segment due to operational and regulatory hurdles. Sales of ferrous segment posted an increase of 7 percent in 9MFY25 which was the result of higher dispatches. The change in sales mix resulted in 8.79 percent drop in gross profit in 9MFY25 with GP margin clocking in at 8.87 percent versus GP margin of 9.58 percent recorded in 9MFY24. Selling & distribution expense mounted by 42.42 percent in 9MFY25 due to higher sales volume of ferrous segment as well as increased advertising budget. Administrative expense ticked up by 5.56 percent in 9MFY25 due to inflationary pressure. Lower profit related provisioning resulted in 76.45 percent lesser other expense recorded in 9MFY25. Other income ticked up by 9.87 percent during the period under review probably due to gain recognized on the sale of store items. MUGHAL's operating profit dwindled by 8.8 percent in 9MFY25 with OP margin clocking in at 7.83 percent versus OP margin of 8.46 percent recorded in 9MFY24. Finance cost ticked down by only 0.51 percent during 9MFY25 as the effect of lower discount rate was greatly offset by increased borrowings. MUGHAL recorded 67.44 percent lower net profit to the tune of Rs.453 million in 9MFY25. This translated into EPS of Rs.1.35 in 9MFY25 versus EPS of Rs.4.15 recorded in 9MFY24. NP margin fell from 2.1 percent in 9MFY24 to 0.68 percent in 9MFY25. Future Outlook Improvement in macroeconomic indicators such as lower discount rate, downward trending inflation and stability of Pak Rupee will greatly fuel the demand in the construction sector. Besides, cheaper energy purchased from Mughal Energy Limited will reduce the company's cost of sales and buttress it margins and profitability.
Business Recorder
7 days ago
- Business
- Business Recorder
IBL HeathCare Limited
IBL HeathCare Limited (PSX: IBLHL) was incorporated in Pakistan as a private limited company in 1997. The company changed its status into a public limited company in 2009. The company is engaged in the marketing, selling and distribution of healthcare products. IBLHL is a wholly owned subsidiary of The Searle Company Limited (PSX: TSCL). Pattern of Shareholding As of June 30, 2024, the company has a total of 85.675 million shares outstanding which are held by 5263 shareholders. The Searle Company Limited (SEARL), which is the holding company of IBLHL accounts for 70.92 percent of its shares followed by local general public holding 16.30 percent shares of IBLHL. The remaining shares are held by other categories of shareholders. Historical Performance (2019-24) IBLHL's topline rode an upward trajectory until 2023 followed by a decline in 2024. Its bottomline slid in 2019 and then picked up until 2023. In 2024, the bottomline drastically fell. IBLHL's margins portray an asymmetrical pattern over the period under review. In 2019, the margins plunged followed by a recovery of gross and net margins in 2020 while operating margin ticked down during the year. In 2021, IBLHL's margins reached their optimum level. In the following year, gross margins slightly picked up while operating and net margins slid. In 2023 and 2024, IBLHL's margins notably dropped (see the graph of profitability ratios). The detailed performance review of the period under consideration is given below. In 2019, IBLHL's net revenue posted 16.69 percent year-on-year rise to clock in at Rs.1584.972 million. During the year, Pak Rupee witnessed drastic depreciation which multiplied the cost of sales of the company as its business is solely based on imported raw materials. Increase in duties and other stringent rules imposed on formula milk and nutritional products also took its toll on the GP margin of the company which slid to 28 percent in 2019 from 31.5 percent in the previous year. Gross profit, albeit, posted a marginal uptick of 3.60 percent during the year. Other income grew by 6.80 percent during the year mainly on the back of rental income from investment property. However, the growth of operating expense on account of inflationary pressure squeezed the operating profit by 8.45 percent year-on-year in 2019. OP margin also dropped to 13.37 percent in 2019 from 17 percent in 2018. Other expense provided some breather as it plunged by 55.75 percent year-on-year in 2019 on the back of lesser exchange losses. Finance cost grew by 264 percent during the year as the company availed short-term running finance facility during the year. High discount rate also drove up the finance cost. In absolute terms, finance cost clocked in at Rs.5.056 million in 2019 which was equivalent to 0.32 percent of the company's topline. IBLHL's bottomline dropped by 18.73 percent year-on-year in 2019 to clock in at Rs.121.376 million with EPS of Rs.2.24 versus EPS of Rs.2.76 posted in 2018. NP margin stood at 7.66 percent in 2019 down from NP margin of 11 percent registered in the previous year. In 2020 while many industries were grappling against the outbreak of COVID-19, most of the pharmaceutical companies enjoyed hefty sales and profit during the year. The topline of IBLHL tremendously grew by 68.12 percent year-on-year to clock in at Rs.2664.604 million in 2020. The robust revenue growth was driven by the addition of new portfolio along with the growth in existing business of the company. The gross profit of the company registered 82.75 percent year-on-year growth during 2020 with GP margin climbing up to 30.45 percent. This was on account of addition of local high margin products in the company's portfolio. Distribution expense more than doubled during the year mainly on the back of sales promotion and marketing activities undertaken coupled with the rise in salaries and wages of sales force. Administrative expense also multiplied by 9.47 percent in 2020 due to higher payroll expense as IBLHL expanded its workforce from 212 employees in 2019 to 262 employees in 2020. Corporate service charges by the ultimate parent company also pushed up administrative expense in 2020. Other income grew by 13.64 percent year-on-year in 2020 on the back of higher interest income on loan to International Brands Limited. IBLHL's operating profit was able to muster 66.46 percent year-on-year growth during 2020. However, OP margin slightly ticked down to clock in at 13.24 percent. Finance cost multiplied by 513 percent in 2020 to clock in at Rs. 31 million owing to high discount rate in most of the months of FY20 coupled with an increase in short-term running finance. IBLHL's debt-to-equity ratio increased from 50 percent in 2019 to 58 percent in 2020. The bottomline posted 81.28 percent year-on-year rise to clock in at Rs.220.03 million in 2020. EPS stood at Rs.4.07 in 2020 while NP margin picked up to 8.26 percent. In 2021, local as well as global economy hadn't recovered from the shocks of COVID-19 which provided the pharmaceutical companies another year of robust sales growth. During the year, IBLHL added pharma and consumer products to its product portfolio which coupled with the existing portfolio mustered 12.73 percent year-on-year growth in topline which was recorded at Rs.3003.909 million. The sale of high margin pharma products as well as the exemption of duties on nutrition and medical disposables resulted in a considerable 26 percent year-on-year growth in the gross profit of IBLHL during 2020. GP margin also climbed up to 34 percent during the year. Other income slid by 39.80 percent year-on-year in 2020 owing to lesser rental income on investment property and lesser interest income on loan to International Brands Limited. Operating expenses kept growing mainly on the heels of increased sales promotion and marketing drives as well as increase in salaries and wages. Induction of additional human resources drove up IBLHL's workforce to 281 employees in 2021 from 262 employees in the previous year. The company boasted 26.19 percent year-on-year growth in operating profit in 2021. OP margin grew to 14.82 percent in 2021. The company obtained long-term financing under refinance scheme initiated by the SBP for the payment of wages and salaries. Moreover, running finances also grew during the period. However, low discount rate kept finance cost in check which dropped by 3.41 percent year-on-year in 2021. The bottomline improved by 36.57 percent year-on-year in 2021 to clock in at Rs.300.488 million with EPS of Rs. 4.63. NP margin clocked in at 10 percent in 2021. In 2022, the company attained 21.55 percent year-on-year growth in topline which clocked in at Rs. 3651.125 million. This was mainly driven by the disposable business and nutrition portfolio. Despite sharp currency depreciation which increased the cost of sales for the company, better sales mix and revised pricing pushed its GP margin slightly up to clock in at 34.41 percent in 2022. Gross profit multiplied by 22.86 percent in 2022. The company made 'other loss' worth Rs.60.105 million in 2022 as against 'other income' posted in the previous years. This was mainly on account of exchange losses made during the year on the back of Pak Rupee depreciation. Inflationary pressure pushed operating expense up in 2022. Bigger workforce of 304 employees also resulted in higher payroll expense. Operating profit managed to post 16.62 percent year-on-year growth in 2022, however, OP margin marginally slid to 14.22 percent. Finance cost shrank during the year despite soaring discount rate as the company repaid the long-term loan obtained in 2021 under refinance scheme. The imposition of super tax enormously increased the tax expense for IBLHL and resulted in a paltry 0.79 percent growth in its bottomline in 2022. The net profit of the company stood at Rs.302.859 million in 2022 with NP margin slipping to 8.3 percent. EPS clocked in at Rs.4.24 in 2022. IBLHL's topline grew by 10.32 percent year-on-year in 2023 to clock in at Rs.4027.874 million. This was on the back of improved performance of medical devices and nutritional business. High cost of sales on the back of increase in supplier prices, Pak Rupee depreciation, elevated energy charges and high inflation pushed up cost of sales by 12.22 percent in 2023. Gross profit inched up by 6.70 percent in 2023, however, GP margin ticked down to 33.28 percent. The company's other loss multiplied by 41.60 percent in 2023 due to higher exchange loss. Marketing expense grew by 8.43 percent year-on-year in 2023 on the back of higher payroll expense of sales force. The company didn't enhance its sales promotion and marketing budget during the year. Operating profit ticked up by 1 percent in 2023 with OP margin falling down to 13 percent. Finance cost surged by 140.66 percent in 2023 due to unprecedented level of discount rate coupled with increased short-term borrowings obtained during the year. IBLHL's bet-to-equity ratio surged to 69 percent in 2023 from 57 percent in 2022. Net profit grew by 2 percent year-on-year in 2023 to clock in at Rs.308.963 million with EPS of Rs.3.610 and NP margin of 7.67 percent. In 2024, IBLHL's net sales plunged by 10.54 percent to clock in at Rs.3603.359 million. Due to high cost of sales on account of inflationary pressure, Pak Rupee depreciation and elevated energy tariff, the company had to revise the prices of its nutritional and infant portfolios. This considerably squeezed the sales volume in these two categories. Cost of sales slid by only 1.34 percent in 2024, resulting in 29 percent slump recorded in gross profit. GP margin descended to its lowest level of 26.41 percent in 2024. Unlike past two years, in 2024, the company posted other income to the tune of Rs.32.84 million. This was on account of exchange gain recorded during the year as against exchange loss recorded in the previous year. Rental income from investment property also rebounded in 2024. Selling expense mounted by 9.88 percent in 2024 due to higher budget allocated for sales promotion activities coupled with increased salaries of sales force as well as higher freight & cartage charges incurred during the year. Administrative expense escalated by 5.34 percent in 2024. While the payroll expense dropped during the year as the company streamlined its workforce from 311 employees in 2023 to 292 employees in 2024, higher administrative expense was the result of elevated IT support & maintenance charges incurred during the year. IBLHL's operating profit deteriorated by 64.51 percent in 2024 with OP margin slipping to 5.17 percent. Finance cost ticked up by 2.52 percent in 2024 due to higher discount rate. This was despite the fact that the company paid off a huge portion of its short-term liabilities during the year which squeezed its debt-to-equity ratio to 57 percent in 2024. Net profit dwindled by a massive 97.55 percent to clock in at Rs.7.555 million in 2024. This translated into EPS of Rs.0.09 and NP margin of 0.21 percent. Recent Performance (9MFY25) During 9MFY25, IBLHL's net sales shrank by 1.17 percent to clock in at Rs.3144.700 million. Higher prices of raw materials took its toll on the nutritional portfolio of the company. Cost of sales mounted by 3.93 percent during the period resulting in 10.73 percent decline recorded in gross profit. GP margin also fell from 34.79 percent in 9MFY24 to 31.42 percent in 9MFY25. The company recorded other loss of Rs.1.378 million in 9MFY25 versus other income of Rs.32.917 million recorded in 9MFY24. This was due to exchange loss recorded during the period. Lower sales volume resulted in 20.49 percent dip in distribution expense in 9MFY25. Conversely, administrative expense hiked by 31.70 percent during the period on account of inflationary pressure. IBLHL recorded 8.26 percent thinner operating profit in 9MFY25 with OP margin sliding down to 9.58 percent versus OP margin of 10.32 percent recorded in 9MFY24. Finance cost slid by 9.75 percent in 9MFY25 due to lower discount rate. IBLHL recorded 25.56 percent erosion in its net profit which clocked in at Rs.135.468 million in 9MFY25. This translated into EPS of Rs.1.58 in 9MFY25 versus EPS of Rs.2.12 recorded in 9MFY24. NP margin plummeted from 5.72 percent in 9MFY24 to 4.31 percent in 9MFY25. Future Outlook Soaring inflation has considerably reduced the purchasing power of consumers which has severely affected the sales of IBLHL's nutrition and health & wellness products. To make up for the curtailed contribution from the aforementioned segments, the company has been actively focusing on its pharmaceutical and medical disposables segments. The company is also undertaking localization to reduce its cost. Copyright Business Recorder, 2025
Business Recorder
15-05-2025
- Business
- Business Recorder
Pakistan Paper Products Limited
Pakistan Paper Products Limited (PSX:PPP) was incorporated in Pakistan as a private limited company in 1984 and was converted into a public limited company in 1962 and was converted into a public limited company in 1964. The principal activity of the company is the manufacturing and sale of exercise books, pro-labels and sensitized papers. Pattern of Shareholding As of June 30, 2024, PPP has a total of 8 million shares outstanding which are held by 807 shareholders. Directors, CEO, their spouse and minor children have the majority stake of 37.11 percent in the company, followed by general public holding 31.65 percent of PPP's shares. Management and Enterprises (Private) Limited, an associated company of PPP holds 11.34 percent of its shares while Banks, DFIs, NBFIs, Modarabas, Mutual Funds, Insurance, Joint stock companies & others collectively account for 8.57 percent of the company's shares. Around 7.83 percent of PPP's shares are held by NIT and ICP and 3.50 percent by public sector companies. Historical Performance (2019-24) PPP's topline has posted growth over the period under consideration. Conversely, its bottomline rose only thrice during that period i.e. in 2021, 2023 and 2024. PPP's margins which eroded until 2020 posted a staggering rebound in 2021. In the subsequent two years, PPP's gross margin continued to pick up while its operating and net margins dropped in 2022 and grew in 2023. In 2024, the margins attained their optimum level (see the graph of profitability ratios). The detailed performance review of each of the years under consideration is given below. In 2019, PPP's topline posted 11 percent year-on-year growth to clock in at Rs.875.44 million. The growth primarily came on the back of an excellent performance of pro-labels segment which registered 19.79 percent improvement in sales. The sale of exercise books however stayed constant during the year as the Sindh government changed the start of the school season from April to July. Consequently, seasonal sales hike which occurred in March-April was shifted in June-August. Sensitized paper also showed terrible performance in 2019 with sales falling by 14.15 percent owing to fall in demand coupled with shortage of raw materials as this was considered to be an obsolete product all over the world and was increasingly being replaced by plotter paper. Given the demand pattern, PPP operated its exercise books, sensitized paper and pro-labels plants at 95 percent, 12.5 percent and 175 percent capacity respectively in 2019. Cost of sales grew by 17.87 percent year-on-year in 2019 which was the effect of Pak Rupee depreciation, steep rise in international commodity prices, high indigenous inflation, electricity tariff etc. This culminated into 23.47 percent year-on-year drop in gross profit with GP margin receding from 16.46 percent in 2018 to 11.34 percent in 2019. Operating expense grew by a marginal 2.21 percent in 2019 due to massive cut in sales promotion expenditure. Payroll expense continued to grow despite restructuring of workforce from 120 employees in 2018 to 115 employees in 2019. Operating profit plummeted by 36 percent year-on-year in 2019 with OP margin sliding down from 10.11 percent in 2018 to 5.82 percent in 2019. Finance cost radically grew by 77.44 percent year-on-year in 2019. This was due to high discount rate coupled with elevated borrowings owing to delay of Exercise books season as well as extended payment period of pro-label sales which created liquidity issues for the company. PPP's net profit slipped by 64.10 percent year-on-year in 2019 to clock in at Rs.17.97 million with NP margin of 2.1 percent versus NP margin of 6.35 percent posted in 2018. EPS also nosedived from Rs.8.34 in 2018 to Rs.2.25 in 2019. The topline growth momentum slowed down to 4.33 percent year-on-year in 2020. PPP's net sales were recorded at Rs.913.31 million in 2020. While the sales of pro-labels grew by 15.57 percent year-on-year in 2020, exercise books posted a sales decline of over 13 percent due to closure of educational institutions in the 4QFY20 on account of COVID-19. Sale of sensitized papers also declined by 17 percent year-on-year in 2020. The capacity utilization of exercise books, sensitized papers and pro-labels segment slid to 86 percent, 7.9 percent and 154.9 percent respectively in 2020. During the year, PPP increased in pro-label production capacity by 500,000 square meters due to robust demand. Cost of sales grew by 5.18 percent year-on-year in 2020 on account of fluctuations in the value of local currency and supply chain impediments, resulting in idle capacity and low absorption of fixed cost. High inventory cost of exercise books segment also led to higher cost during the year. Gross profit shrank by 2.38 percent year-on-year in 2020 with GP margin falling to 10.61 percent. Operating expense escalated by 9.39 percent year-on-year on the back of higher carriage and forwarding charges as there were restrictions on the movement of people and goods owing to COVID-19. High payroll expense also contributed towards elevated operating expense in 2020. Operating profit inched down by 12.83 percent year-on-year in 2020 with OP margin climbing down to 4.87 percent. Finance cost contracted by 15.51 percent year-on-year in 2020 due to monetary easing in the later part of the year. Short-term borrowings, however, grew during the year due to tighter liquidity position. Bottomline narrowed down by 13.38 percent year-on-year in 2020 to clock in at Rs.15.57 million with NP margin of 1.70 percent and EPS of Rs.1.95. PPP posted topline growth of 19.67 percent year-on-year in 2021 with net sales clocking in at Rs.1092.96 million. Pro-label sales grew by 22.4 percent in 2021. Exercise books also posted sales growth of 14.5 percent in 2021, however, given the low-base of 2020, the turnover didn't prove to be as exciting for the company. Sensitized paper sales grew by 11.92 percent during the year, however, its contribution to PPP's total sales squeezed to just 1.1 percent. The company was also mulling over discontinuing this line completely as procurement of raw materials for this segment was challenging for the company due to lack of suppliers. Cost of sales grew by 14.18 percent in 2021, resulting in a tremendous 65.94 percent rise in gross profit in 2021. This was on account of favorable movement of local currency during the year. Operating expense was cut down by 4.10 percent year-on-year in 2021 due to curtailed payroll expense during the year which counterbalanced the impact of increased sales promotion expense incurred during the year. During 2021, PPP also registered exchange gain worth Rs.4.86 million and amortization of deferred government grant worth Rs.2.67 million which drove its other income up by 5262.75 percent during the year. Operating profit rebounded by 154.23 percent in 2021 with OP margin clocking in at 10.34 percent. Finance cost slid by 30 percent year-on-year in 2021 despite increased borrowings during the year. This was due to monetary easing. Lower finance cost provided further impetus to bottomline which grew by 353.11 percent year-on-year in 2021 to clock in at Rs.70.55 million. EPS jumped up to Rs.8.82 while NP margin improved to 6.46 percent in 2021. In 2022, PPP witnessed 12.92 percent year-on-year growth in its net sales which clocked in at Rs.1234.19 million. Pro-label sales remained flat during the year in terms of PKR with 10 percent drop in volume due to lower demand and intense competition in the industry. Exercise books performed really well during the year and registered a robust 45 percent growth in sales which was led by high volume as well as upward revision in prices. The sale of sensitized paper drastically plunged by 27.9 percent in 2022 (see the graph of segment-wise production and capacity utilization to get a gist of production volumes during the year which were in line with demand). Steep depreciation of Pak Rupee, high inflation, elevated global commodity prices and increase in energy tariff culminated into 12.11 percent spike in cost of sales. However, as the company was able to pass on the effect of cost hike to its customers, gross profit improved by 17.63 percent in 2022 with GP margin further rising to 15.33 percent. Operating expense shot up by 25 percent year-on-year in 2022 which was the effect of high payroll expense, freight charges as well as sales promotion expense incurred during the year. Number of employees grew from 111 in 2021 to 118 in 2022. Operating profit registered 8.80 percent rise in 2022; however, OP margin fell to 9.96 percent. Finance cost soared by a huge 103.50 percent in 2022 which was mainly due to exchange loss amid drastic depreciation of Pak Rupee as majority of PPP's raw material is imported. High discount rate as well as increased borrowings also wreaked havoc on finance cost in 2022. This translated into 12.50 percent thinner bottomline in 2022. Net profit clocked in at Rs.61.74 million in 2022 with EPS of Rs.7.72 and NP margin of 5 percent. With an impressive year-on-year rise of 41.46 percent, PPP's net sales clocked in at Rs.1745.90 million in 2023. This was due to robust performance of both pro-labels and exercise books which registered sales growth of 31.61 percent and 58.68 percent respectively in 2023. Sales proceeds from plain paper and waste paper also increased during 2023 while sales proceeds from Ammonia paper fell. Pak Rupee depreciation took its toll on the cost of sales of PPP as it uses imported raw materials particularly in the pro-label segment. However, price increase coupled with phenomenal volume resulted in a 54 percent rise in gross profit and GP margin burgeoning to 16.69 percent in 2023. Operating expense grew by 9.24 percent year-on-year on account of higher payroll expense, freight charges, utility charges and vehicle running expense incurred during the year. Operating profit rose by 76.17 percent year-on-year in 2023. OP margin also climbed to 12.40 percent in 2023. Finance cost soared by 158.31 percent year-on-year in 2023 due to high discount rate as well as exchange loss borne during the year. Short-term borrowings also increased during the year to meet working capital requirements. PPP posted bottomline growth of 44.20 percent in 2023. Net profit stood at Rs.89.03 million in 2023 with EPS of Rs.11.13 and NP margin of 5.10 percent. In 2024, PPP's topline grew by 10.39 percent to clock in at Rs.1927.28 million. The topline growth came on the back of 14.22 percent growth in the sale of exercise books, 7.8 percent growth in the sale of pro-labels and 3.6 percent growth in the sale of photocopy paper. Conversely, sale of sensitized paper posted 2.8 percent year-on-year decline in 2024. The sale proceeds of pro-labels grew during the year on the back of increase in prices, however, its volume fell due to decline in economic activity as well as intense competition in the market. The company is also planning to shut down the production of sensitized paper as soon as it consumes its existing inventory and completely replace it with plotter/photocopy paper which has been showing reasonable growth in demand. Decline in the prices of pulp in the international market coupled with stability in the value of Pak Rupee enabled PPP to drive up its gross profit by 34.31 percent in 2024 with GP margin attaining its optimum level of 20.30 percent. Operating expense surged by 13.18 percent in 2024 mainly on account of higher payroll expense due to market induced rise in salaries & wages. Provision done for WWF, WPPF and ECL resulted in 159.45 percent escalation in other expense in 2024. Conversely, other income dipped by 26.98 percent due to high-base effect as the company recognized gain on the sale of fixed assets in the previous year. PPP's operating profit strengthened by 34.35 percent in 2024 with OP margin climbing up to 15.10 percent. Finance cost tapered off by 28.70 percent in 2024 due to considerably lower exchange loss, better cash flow management including recovery from customers. Net profit picked up by 75.12 percent to clock in at Rs.155.91 million in 2024. This translated into EPS of Rs.19.49 and NP margin of 8.1 percent. Recent Performance (9MFY25) During 9MFY25, PPP's net sales contracted by 10.38 percent to clock in at Rs.1279.74 million. This was particularly triggered by a massive fall in the sale of exercise books. During 3QFY25, the sale of exercise books began to recover as the company greatly reduced the prices. Sensitized paper & photocopy paper also registered decline during the period. The sale of pro-labels remained intact at the last year level, however, posted a paltry rise in terms of volume. The drastic decline in the sale of paper was due to the prevalence of unorganized sector which is providing cheap paper at very low rates. Therefore, the company now focuses on institutional sales rather than market sales. Although the prices of pulp have decreased lately with Pak Rupee also showing vigor, lesser absorption of fixed cost due to low capacity utilization and reduction of prices of exercise books resulted in 26.72 percent fall in gross profit in 9MFY25 with GP margin slipping to 17.16 percent from GP margin of 20.98 percent recorded in 9MFY24. Operating expense surged by 11.30 percent in 9MFY25 apparently due to higher payroll expense. Lower provisioning done for WWF, WPPF and ECL appears to be the reason behind 80 percent shrinkage in other expense in 9MFY25. Other income improved by 126.62 percent in 9MFY25 seemingly due to higher profit from financial assets as the company's bank deposits significantly mounted during the period. PPP registered 26.11 percent thinner operating profit in 9MFY25 with OP margin clocking in at 11.65 percent versus OP margin of 14.13 percent posted in 9MFY24. Lower discount rate and stronger Pak Rupee resulted in 35.53 percent drop in finance charges in 9MFY25. Net profit weakened by 21.69 percent to clock in at Rs.88.105 million. This translated into EPS of Rs.11.01 in 9MFY25 versus EPS of Rs.14.06 posted in 9MFY24. NP margin also deteriorated from 7.88 percent in 9MFY24 to 6.88 percent in 9MFY25. Future Outlook The company has significantly improved its operational efficiency and reduced waste by modernizing its exercise books production line. The machinery installed by PPP is one of its kinds in Pakistan and will play a pivotal role in enhancing the quality of the company's products besides reducing its cost. The company is also investing in energy efficiency solutions to lower its energy cost. These initiatives will enable PPP to combat the competition from the unorganized sector.
Business Recorder
14-05-2025
- Business
- Business Recorder
Remittances, money supply, and the ghost of inflation past
In an unexpected twist, Pakistan is witnessing a sharp acceleration in money supply growth at precisely the time it should have been slowing. Despite the public sector's long-awaited retreat from wheat procurement—and with it, the traditional seasonal build-up in commodity operations debt—money supply indicators are rising across the board. Currency in Circulation (CiC), Reserve money (M0), and Broad money (M2) are all clocking over 14 percent year-on-year growth since March 2025. The timing is not coincidental. Historically, the fiscal machinery—via commodity operations—was the primary culprit behind post-harvest liquidity spikes. Between 2013 and 2023, commodity operations debt rose by an average 36 percent between April and June each year. While this debt was formally captured under M2, it consistently leaked into M0, causing Reserve money (M0) to grow by 6 percent during the same seasonal window. Why? Because the government's borrowing from banks to purchase wheat injected cash directly into rural markets, feeding cash demand and drawing on liquidity in the interbank to support vault cash and reserve requirements. But not this year. Government borrowing for commodity operations is in net settlement mode. There is no surge in seasonal debt. There is no fresh fiscal injection into rural mandis. And yet—Reserve money is booming. The big question is: why? The answer likely lies offshore. March 2025, coinciding with Ramzan and Eid-ul-Fitr, saw record growth in monthly inward remittances—up over 35 percent year-on-year. But here is the critical dynamic: SBP insists that it is not injecting dollars to defend the exchange rate. Instead, it is mopping up the excess FX from the interbank market to prevent the rupee from appreciating too quickly—and using those purchases to meet country's external debt obligations. In doing so, it is injecting rupee liquidity into the system. If those rupee injections are not being sterilized—if the counterpart Pak Rupee is left floating in the banking system—then we have a new, powerful monetary injection mechanism: remittance-driven reserve money expansion. And this time, it is likely showing up not just in banks' deposits with SBP, but also in currency in circulation (CiC), which had previously plateaued. Between Mar-Nov 2024, year-on-year increase in CiC had averaged below 5 percent. Over the past 12 weeks, it has averagedat nearly 15 percent. Reserve money (M0), appears to be following similar trends, averaging 13 percent, against 7 percent between Mar-Nov 2024. If Reserve money is rising despite the absence of fiscal monetization—and due instead to remittance driven Pak Rupee injections—then SBP must come clean about its intervention and sterilization strategy. The question no longer is whether the exchange rate is being defended, but whether remittance absorption is being silently monetized. If unsterilized remittance inflows are driving liquidity expansion, SBP risks fuelling demand-side inflation just as the economy begins to stabilize. In a low-velocity, high-liquidity environment, the lag may be deceptive—but the inflation impulse, when it comes, will be real. The central bank must urgently clarify its sterilization strategy. If it chooses to absorb remittances without mopping up the resulting liquidity, it must do so with eyes wide open—and a credible inflation management plan in place. Failing that, it may find itself once again chasing inflationary shadows with a blunt rate hike months too late.
Business Recorder
28-04-2025
- Business
- Business Recorder
Hoechst Pakistan Limited
Hoechst Pakistan Limited (PSX: HPL) (formerly known as Sanofi-aventis Pakistan Limited) was incorporated in Pakistan in 1967. The company got listed on Pakistan stock exchange in 1977. It underwent several mergers, acquisitions and divestments over the course of years which led to the change of company's name to Sanofi-Aventis Pakistan Limited. During 2023, a consortium led by Packages limited, including IGI Investments (Private) Limited and affiliates of Arshad Ali Gohar Group acquired entire 52.87 percent shares from Sanofi Foreign Participations B.V. and changed the name of the company from Sanofi-aventis Pakistan Limited to Hoechst Pakistan Limited with effect from September 27, 2023. The company's manufacturing site was established in Karachi in 1972. The principal activity of the company is the manufacturing, selling and trading of pharmaceutical and related products ranging from oral solids and liquid dosage to highly sophisticated sterile products Pattern of Shareholding As of December 31, 2024, HPL has a total of 9.645 million shares outstanding which are held by 881 shareholders. Associated companies, undertakings and related parties have the majority stake of 74.73 percent in the company. Directors, CEO, their spouse and minor children represent 17.45 percent of the company's shareholding followed by local general public holding 2.82 percent shares. The remaining shares are held by other categories of shareholders. Financial Performance (CY19- CY24) The topline of HPL has posted growth in all the years except in CY20. Conversely, its bottomline slid twice during the period under consideration i.e. in 2019 and 2022. HPL's margins which considerably eroded in 2019 rebounded in 2020. In 2021, while gross margin ticked down, operating and net margins registered growth. Conversely, in 2022, the company recorded a slight growth in its gross margin while operating and net margins drastically fell. In 2023, gross margin slightly dipped while operating and net margins ticked up. In 2024, all the margins significantly picked up and attained their optimum level (see the graph of profitability ratios). The detailed performance review of the period under consideration is given below. In 2019, HPL's topline posted year-on-year growth of 11.88 percent to clock in at Rs.14,500.68 million. The major growth propellers were Flagyl, Clexane and Plavix whose sales grew by 26 percent, 37 percent and 32 percent respectively during the year. High inflation, Pak Rupee depreciation and significant dependence on imported raw materials drove up the cost of sales by 19.54 percent in 2019. Moreover, stiff price regulations also affected the company's gross margin which slid from 30.45 percent in 2018 to 25.69 percent in 2019. Gross profit also shrank by 5.62 percent in 2019. Distribution and administrative expense escalated by 9.79 percent and 11.11 percent respectively in 2019 on account of higher staff cost. Other expense showed a rather favorable picture as it slid by 24.38 percent in 2019 owing to better management of exchange loss. Other income almost doubled in 2019 mainly on the heels of recovery of insurance claims. HPL's operating profit plunged by 34.22 percent in 2019 with OP margin dipping to 4.27 percent from OP margin of 7.26 percent recorded in 2018. Finance cost surged by 389.23 percent in 2019 on account of higher discount rate coupled with a substantial increase in the company's short-term borrowings. HPL bottomline plunged by 74.73 percent year-on-year in 2019 to clock in at Rs.154.84 million with EPS of Rs.16.05 versus EPS of Rs.63.54 in 2018. NP margin also drastically dropped from 4.73 percent in 2018 to 1.07 percent in 2019. In 2020, HPL's sales dropped by 2.71 percent year-on-year to clock in at Rs.14,107.80 million. This was on account of closure of HCP clinics throughout the lockdown period. 71 percent of HPL's sales came from antibiotics, diabetics and cardiology while the remaining sales were contributed by pain & allergy and other categories. Local sales formed 95.21 percent of HPL's gross sales in 2002. Export sales grew by 74 percent year-on-year in 2020 which particularly comprised of sales to Afghanistan. Cost of sales dropped by 4.39 percent in 2020 due to rationalization of commercial conditions, price increase etc. This resulted in 2.14 percent bigger gross profit recorded by HPL in 2020 with GP margin rising up to 26.97 percent. Selling & distribution expense slid by 15.1 percent in 2020 on account of a drop in marketing activities and decrease in travel costs due to lockdown. Conversely, administrative expense registered 10.33 percent hike in 2020 on the back of higher payroll expense although number of employees were reduced from 1099 in 2019 to 968 in 2020. Huge exchange loss on account of Pak Rupee depreciation was somewhat offset by no provisioning done for tax receivable in 2020. Nevertheless, other expense climbed up by 4.17 percent in 2020. Operating profit of the company grew by 51.62 percent year-on-year in 2020 culminating into OP margin of 6.65 percent. In 2020, HPL was able to contain its financial cost which dropped by 19.44 percent year-on-year. This was mainly due to significant drop in short-term borrowings on account of streamlining of payment cycle and changing the distributor model coupled with downward revision in discount rate during the year. The company also availed refinance scheme by SBP to ensure continued employment and ease liquidity challenges during the global pandemic. HPL bottomline posted a staggering 218.44 percent year-on-year growth in 2020 to clock in at Rs.493.07 million with EPS of Rs.51.12 and NP margin of 3.49 percent. 2021 was the year when local as well as global economies were overcoming from Covid-19 shocks. SBP had made downward revisions in the discount rate to stabilize the economy. HPL's net sales showed a year-on-year growth of 12.57 percent in 2021 to clock in at Rs.15, This was because HCP clinics resumed after the lockdown period which meant greater accessibility. High prices also played a role in topline growth. Gross profit also improved by 8.36 percent in 2021, however, GP margin marginally plummeted to clock in at 25.96 percent owing to Pak Rupee depreciation and company's dependence on imported active pharmaceutical ingredients (APIs) and finished goods. HPL was successful in keeping a check on its distribution & administrative expenses which nosedived by 2.85 percent and 8.96 percent respectively in 2021. This was on account of lower staff cost as the company's workforce was trimmed down to 869 employees during the year. This coupled with buoyant other income mainly coming on account of massive insurance claim recovery resulted in an impressive OP margin of 9.22 percent in 2021 along with 56.14 percent higher operating profit. Finance cost nosedived by 51.23 percent in 2021 owing to lower discount rate. The bottomline bagged a year-on-year growth of 83.74 percent in 2021 to clock in at Rs.905.95 million with NP margin of 5.7 percent and EPS of Rs.93.93. In 2022, HPL posted 16.87 percent year-on-year rise in its topline which was recorded at Rs.18,559.88 million. During the year, HPL's flagship brand registered 41 percent growth. This pushed the sales of antibiotics category up by 34 percent in 2022. Cost of sales surged by 16.42 percent during the year which was mainly on account of higher raw material prices coupled with Pak Rupee depreciation. Gross profit improved by 18.15 percent in 2022. GP marginal registered an uptick to clock in at 26.24 percent. Upbeat sales volume was driven by increase in promotional activities and engagement with the healthcare professionals which increased the selling and distribution expense by 35.93 percent in 2022. Moreover, rise is logistics cost and relentless efforts to recover the outstanding receivables also played a considerable role in pushing the selling and distribution expense up. Administrative expense soared by 44.20 percent in 2022 on the back of higher staff cost. Massive depreciation in the value of local currency resulted 137.25 percent higher other expense incurred by HPL in 2022. Operating profit deteriorated by 47.17 percent in 2022 with OP margin slipping to 4.17 percent. Higher discount rate and increased short-term borrowings obtained by the company in 2022 translated into 75.23 percent spike in finance cost in 2022. Gearing ratio also touched its highest value of 22 percent during the year (see the graph of gearing ratio & finance cost). HPL's net profit plummeted by 81.59 percent in 2022 to clock in at Rs.166.78 million with EPS of Rs.17.29 and NP margin of 0.9 percent. 2023 was characterized by multiple upward revisions in the discount rate, Pak Rupee depreciation, skyrocketed inflation, import restriction, energy crisis and general slowdown in the economic activity. Despite all the headwinds, HPL attained a reasonable topline growth of 15.14 percent in 2023. Net sales were recorded at Rs.21,368.95 million in 2023. While local sales posted growth during the year, export sales dipped. The sales proceeds from the flagship brand 'Flagyl' crossed Rs. 5 billion mark in 2023. Cost of sales also grew by 15.73 percent year-on-year in 2023 on the back of aforementioned challenges. Gross profit increased by 13.46 percent in 2023 with GP margin slightly ticking down to 25.86 percent. While the company curtailed it's travelling and promotion activities in 2023, 1.12 percent higher distribution expense was the consequence of increased freight charges, sales commission and insurance charges incurred during the year. Administrative expense also surged by 8.91 percent in 2023 on the back of high software license/maintenance. HPL streamlined its workforce from 744 employees in 2022 to 734 employees in 2023, resulting in lower staff cost. This greatly offset the software license fee incurred during the year. Gigantic exchange loss translated in 44 percent escalation in other expense in 2023. Other income mounted by 114.94 percent in 2023 due to higher insurance claim, markup on bank deposits, dividend income, scrap sales and reversal of provision against stamp duty. Operating profit strengthened by 40.96 percent in 2023 with OP margin ticking up to 5.10 percent. Finance cost mounted by 250.77 percent in 2023 on account of higher discount rate. The company had no outstanding borrowings as of December 31, 2023. This resulted in gearing ratio of 0 percent in 2023. Net profit built up by 116.33 percent in 2023 to clock in at Rs.360.807 million. This culminated into EPS of Rs.37.41 and NP margin of 1.69 percent. In 2024, HPL registered 25.17 percent year-on-year growth in its topline which clocked in at Rs.26,747.83 million. 70 percent of the net sales of the company came from Antibiotics, Diabetics and Cardiology segment. Within antibiotics segment, 78 percent of the sales are contributed by the flagship brand 'Flagyl'. Deregulation of the prices of non-essential medicines (initiated from February 19, 2024) contributed a great deal in driving up the GP margin of the company which clocked in at its optimum level of 31.51 percent in 2024. In absolute terms, gross profit surged by 52.49 percent in 2024. Selling & distribution expense mounted by 26 percent in 2024 which was mainly driven by higher salaries of sales force, freight charges, sales commission, travelling & conveyance charges as well as conferences and exhibitions expense incurred during the year. Administrative expense escalated by 31 percent in 2024 on the back of higher payroll expense, security, repair & maintenance charges incurred during the year. HPL expanded its workforce from 717 employees in 2023 to 807 employees in 2024. Other expense plunged by 60.49 percent in 2024 as the company recorded exchange gain in 2024 as against exchange loss recorded in the previous year. Other income also slumped by 39.38 percent in 2024 due to considerably lower markup income recognized from bank deposits, lower insurance claim, lesser scrap sales and no reversal of provision against stamp duty booked during the year. Operating profit strengthened by 232.21 percent in 2024 with OP margin climbing up to 13.55 percent. Finance cost tapered off by 17.31 percent due to the onset of monetary easing cycle in 2024. This was despite the fact that HPL obtained fresh short-term borrowings and lease liabilities in 2024 which resulted in a gearing ratio of 16 percent from gearing ratio of 0 percent recorded in 2023. Net profit improved by 414.72 percent in 2024 to clock in at Rs.1857.147 million in 2024. This translated into EPS of Rs.192.56 and NP margin of 6.94 percent. Future Outlook The company is putting its best foot forward to navigate through the macroeconomic challenges by controlling its cost, attaining operational efficiency, increasing market penetration and attaining price rationalization. The company is reducing its energy cost by generating solar energy which increased from 436,648 kWh in 2023 to 1,324,843 kWh in 2024. The company has also approved the formation of a wholly owned subsidiary in the UAE which will expand its international footprint. Besides, the company has also approved the acquisition some products with associated trademarks from Sanofi affiliates under transfer and assignment agreement. This will diversify the company's sales mix.
