Karachi: Mughal Steels announced its financial results for the fourth quarter of fiscal year 2026, reporting a consolidated profit of Rs312 million, translating to an earnings per share (EPS) of Rs0.93. This marks a 29% decrease from the previous year and a 26% decline from the previous quarter, falling short of market expectations due to lower-than-anticipated net sales.
According to JS Global, the company's annual performance for FY26 showed a substantial turnaround with a reported profit of Rs2.2 billion, or an EPS of Rs6.53, which is a 157% increase from the Rs852 million profit recorded in FY25. Despite this annual growth, Mughal Steels faced challenges in the fourth quarter, with net sales decreasing by 22% year-on-year and 3% quarter-on-quarter to Rs17.8 billion, contributing to a 12% year-on-year decline in FY26 net sales, which totaled Rs77.9 billion.
The company's gross margins slightly improved to 9.06% in the fourth quarter compared to 8.77% in the third quarter of FY26, although they were still lower than the 9.75% recorded in the same quarter of the previous year. For the full year, gross margins increased to 11.2%, up from 9.1% in FY25. The fluctuation in steel scrap prices, which averaged US$406 per ton in the fourth quarter, up from US$347 per ton a year earlier, contributed to these variations.
Finance costs for the fourth quarter rose by 1% year-on-year and 25% quarter-on-quarter to Rs1.07 billion, driven by increased borrowings. However, for FY26, finance costs decreased by 34% year-on-year to Rs3.75 billion. Meanwhile, selling and distribution expenses surged by 48% year-on-year and 185% quarter-on-quarter to Rs71 million.
A notable element of the financial report was a tax reversal of Rs296 million in the fourth quarter, contrasting with an effective tax rate of 41% in the same period last year. This adjustment brought the effective tax rate for FY26 to 34%.
In addition to the earnings report, Mughal Steels announced a cash dividend of Rs2.00 per share, exceeding industry expectations. The company is currently trading at a forward price-to-earnings ratio of 8.7x for FY27.