Karachi: Systems Limited (SYS) is expected to report a net profit after tax (NPAT) of PkR1.7 billion for the third quarter of CY24, marking a 9.4% decrease from the same period last year. Despite growing revenues, particularly from the Middle East and European markets, the company faces margin pressures due to increased operational costs associated with expanding its workforce.

According to AKD Securities Limited, Systems Limited’s revenue for the quarter is projected to reach PkR16.6 billion, up 17.4% year-over-year, driven by strong performance in the Middle East and Europe with respective growths of 39.1% and 9.3%. However, revenue from the Pakistani market is expected to decline by 32% compared to last year.

The company’s gross margin has decreased to 22.6% from 27.3% last year, primarily due to a shift in workforce allocation. The percentage of employees based in Pakistan has reduced from 86.3% to 84.5%, while the workforce in higher-cost regions such as the UAE and Egypt has increased. This geographical shift in human resources has led to higher overall expenses, impacting profitability.

Furthermore, a slight appreciation of the Pakistani Rupee against the US dollar has led to an expected exchange loss of PkR45 million on the company’s foreign currency assets. This contrasts with the depreciation observed in the same quarter the previous year, further affecting the financial stability of the firm.