Karachi, Kohinoor Textile Mills Ltd (KTML) disclosed its financial results for the fiscal year 2023, revealing a significant 66% year-over-year increase in earnings per share and a dividend payout of Re1.0/share. The announcement came during the company’s corporate analyst briefing held today.
According to JS Research, the impressive earnings growth of Rs23.92 per share was primarily driven by revenue increases of 7% and 12% in KTML's spinning and home textile segments, respectively, along with robust cement operations (MLCF). However, the company also faced challenges, including a rise in input and power costs due to the depreciation of the Pakistani Rupee and greater reliance on imported raw materials. This led to a 2 percentage point decline in gross margins.
The management noted that the effective cost of debt for KTML jumped from 8% to 15% in FY23 compared to the previous year, primarily due to changes in State Bank of Pakistan rates for Export Refinance Facility (ERF). This resulted in a 63% year-over-year increase in the company's financial charges.
In the first quarter of FY24, KTML reported a 9% increase in net earnings to Rs28.25, with revenues up by 39% and gross margins improving by 200 basis points to 26% year-over-year.
Facing recent increases in gas and power tariffs, KTML's average cost of power rose to Rs34.07/KWh from Rs22.97/KWh recorded in FY23. The company is actively diversifying its power mix, which currently includes gas, bowser gas, Furnace Oil (FO), solar, and national grid power. To further reduce power costs, KTML plans to install a 12.5MW solar power plant by December 2023, aiming to lower its power cost to 10 cents/KWh.
In an effort to reduce dependence on imported inputs and manage costs more effectively, KTML has already secured its raw cotton supply up to March 2024 and is in the process of procuring additional stock. The company also anticipates volumetric growth across all its business segments in FY24, both in domestic and export markets.
Moreover, the management expressed optimism about the potential changes in gas tariffs resulting from the rationalization of tariffs across the country, which could benefit exporters in Punjab by aligning their gas charges with those in South and KPK.