Karachi, February 20, 2023 (PPI-OT): NML: 2QFY23 Earnings clock in at PkR10.5/sh

Nishat Mills Limited (NML) reported its earnings earlier today, wherein the company posted unconsolidated NPAT of PkR3.7bn, higher by 59%YoY, while lower by 11% compared to the earlier quarter. For 1HFY23, the company posted earnings of PkR7.8bn, higher by 40%YoY.

As expected, the topline shrank on a sequential basis, by ~3%, clocking in at PkR33.2bn. However, the drop in net sales was not as pronounced as our expectations of a 6% decline. This indicates a lower than anticipated contraction in the export orders and better translations in the local currency.

Gross margins for the quarter clocked in at 14.4%, substantially lower than the 19.4% recorded in the earlier quarter, while remaining higher than the 12.7% recorded in the same period last year.

The company was able to keep its Distribution and Admin expenses in check during the quarter, with the line items dropping by 26% and 11% on a QoQ basis, respectively. The overheads collectively made up 5.5% of the quarterly sales, compared to 6.9% in the earlier quarter.

Some respite to earnings came in the form of higher other income, clocking in at PkR3.2bn, growing by 1.1x, on both the QoQ and YoY basis.

However, the benefit of the Other income was somewhat offset by heightened finance costs during the quarter, coming in at PkR1.5bn, compared to PkR832mn in the earlier quarter. This was likely a product of higher borrowing to fund working capital requirements, along with high interest rate prevalent in the economy.