Key Takeaways:
• Profitability Falls in FY24 Despite 60% Growth in Sales, Facing Global and Local Problems
• Sales Tax Adjustments Expected by April 2025
In FY24, the company reported a sharp decline in profitability, with net earnings decreasing to PKR 77.02 million (EPS: PKR 4.12) from PKR 589.95 million (EPS: PKR 31.55) in FY23. Sales of NAGC rose to PKR 20.45 billion during the year, compared to PKR 12.82 billion in the corresponding period last year.
Gross profit increased to PKR 1.61 billion, up from PKR 1.34 billion in FY23, supported by higher revenue. Management outlined several challenges impacting performance, including compressed margins, subdued demand, inconsistent energy supply, taxation policy uncertainties, and heightened global competition driven by elevated energy costs.
The global economic slowdown, particularly in China, added further pressure on export markets. The company expects the funds tied up in sales tax to be adjusted against output tax by March-April 2025. The exportto-import ratio of cotton stood at 80:20 during the year.
Additionally, management noted that solarization initiatives and a stable gas supply contributed to cost efficiencies. Under the Export Financing Scheme (EFS), imported yarn is exempt from sales tax, provided the resulting thread and cloth are exported. Looking ahead, management is optimistic about a recovery in the Chinese economy, anticipating improved export demand and margin recovery in the coming fiscal periods.
Important Disclosures
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