In FY24, OTSU reported a loss of PKR 4.8 million (LPS: PKR 0.39), reflecting a 34% improvement from the previous year’s loss of PKR 7.21 million (LPS: PKR 0.60).
During this period, gross profit declined by 10%, while operating profit rose substantially to PKR 121.78 million in FY24 from PKR 35.87 million in the SPLY.
Net sales increased modestly by 4%, reaching PKR 3.16 billion, despite an 8% rise in the cost of sales, which totalled PKR 2.59 billion.
Gross profit margins dropped to 18% in FY24 (from 21% in FY23) due to higher costs, while operating and net profit margins improved to 4% (1% in FY23) and 1% (from a 16% loss in FY23), respectively. Segment-wise, OTSU saw diverse performance across sales channels: IV sales surged by 51%, followed by CN at 40%, MD at 3%, and TD at 6%. OTSU’s products follow a seasonal inventory trend, with stock levels rising in January, February, and March before declining in subsequent months.
However, OTSU plans to further reduce its inventory levels. Efforts to rationalize the IV business and strategize CN sales led to a 200% increase in CN sales in September, with this growth continuing into October 2024.
Changing distributors improved margins and cash flow in the southern region, including Karachi. Management plans to expand the clinical nutrition segment by introducing new high-margin, value-added products such as Fatolip, Kidmin, and Amiparen. Previously, Kidmin was imported from the group company. With registration received for Fatolip, a 1QFY25 launch is planned, alongside significant promotional efforts due to its high-margin potential.
The company noted a 7% increase in regulated products and endorsed the de-regulation of non-essential products. A hardship-based request to DRAP has been submitted for price increases on nine products, particularly IV solutions, to address escalating production and operational costs.
OTSU also introduced new products, ORTEie in FY23 and Alpha Berry in FY24, with positive market reception. The breakup value was reported at PKR 55.80 per share.
OTSU operates five production lines: Line I for CN products and 100 mL, Line II for IV Solutions 1000 mL, Line III for small-volume ampules, and Line IV for nutrition products.
Management reported that the dividend was not announced due to margin compression and liquidity issues. However, the Company plans to give a final dividend of 20-22% in FY25. Management anticipates ongoing economic challenges, including high inflation, rising utility costs, global oil prices, and exchange rate fluctuations.
Plans include a PKR 100 million CAPEX renovation of Line I and a gradual increase in nutritional product sales through new investments.
The company’s strategic focus remains on clinical nutrition and nutraceuticals with upcoming launches of new value-added products
Important Disclosures
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