Nishat Mills reports higher sales & profits during Q1
Nishat Mills Limited presents the results for the half year ended December 31, 2010. In the first half year of 2010-2011, the company has continued its revenue and profit growth trend from the financial year 2009-2010. The after tax profit of the Company in half year ended December 31, 2010 has significantly increased to Rs 2,058.369 million compared to Rs 1,010.491 million in the previous corresponding period ended December31, 2009, showing an excellent increase of 103.70 %.
Similarly, the gross profit for the current period has increased to Rs 3,282.460 million compared to Rs 2,489.474 million in the previous corresponding period. This significant growth in gross profit and net profit is mainly attributable to sizeable increase in quantities and better prices of the products manufactured and sold by the Company.
In the challenging times faced by the textile industry of Pakistan, Nishat Mills Limited achieved excellent results in the current period over the previous corresponding period through contribution by all its business segments. Our spinning business, particularly, has reaped the benefits of high investment in cotton in the last season when there was an unprecedented rise in cotton and cotton yarn prices besides being ably supported by excellent production facilities.
Also our new established garments business has shown excellent results in the current period and is expected to grow further in future. Furthermore, we have been benefitted from good returns on an excellent equity investment portfolio of the Company.
There is an excellent increase of 259.70% in other operating income of the Company from Rs 335.582 million for the period ended December 31, 2009 to Rs 1,207.103 million (for the period ended December 31, 2010). This increase is mainly comprised of dividend received on the new investments made in Lalpir Power Limited and Pak Gen Power Limited, increase in dividend received on old investments, gain on timely sale of a part of our investment in Nishat Power Limited and large financial gain on foreign exchange derivatives. The Company has also focused on more effective funds management.
Furthermore, due to effective cost curtailment measures, the increase in distribution and administrative expenses is only 24.30% and 21.22% respectively despite 50.82% increase in sales. Similarly, owing to excellent profit of the financial year 2009-2010 and better funds management, the Company has been able to limit the increase in its finance cost to 29.02% only (December 2009: Rs 546.828 million, December 2010: Rs 705.501 million) from the previous corresponding period.
Market Review and Future Prospects
Textile industry in Pakistan is facing multiple challenges internally and globally. On domestic front ever increasing production cost, uncertainty about cotton supply and prices and double digit inflation are posing a major threat to thetextile industry. High energy cost and inflation have swelled up to almost twice in the last twelve months together with prolonged power and gas shut downs have made it very difficult for the textile companies to survive and compete in the international markets. On these fronts the situation is expected to remain volatile in the near future.