Nishat Mills posts higher sales & profit
Nishat Mills Limited released financial results for the nine months period ended March 31, 2011.
During this period, the Company continued to achieve excellent growth in its revenue and profit. The after tax profit of the Company in nine months period ended March 31, 2011 significantly increased to Rs 3,481.882 million compared to Rs 1,810.674 million in the previous corresponding period ended March 31, 2010, showing an excellent increase of 92%. Similarly, the gross profit for the current period increased to Rs 5,739.314 million as compared to Rs 4,076.012 million in the previous corresponding period.
This excellent growth in gross profit and net profit was mainly due 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, in particular, has reaped the benefits of timely investment in cotton. Through a successful cotton buying strategy, we not only achieved excellent results in spinning business but also contributed towards better margins of other segments of our composite business especially weaving. Furthermore, our garments business showed excellent results in the current period and is expected to grow further in future. However, the gross profit percentage of the Company decreased to 16.46% in the current period from 18.25% in the previous corresponding period.
The decrease in gross profit percentage was mainly due to increase in raw material prices for our value added business, which could not be fully passed on to our value added business customers, and increase in electricity generation cost due to excess use of diesel and furnace oil during the frequent shut downs of gas supply. However, we have been benefitted from good returns on our equity investment portfolio of the Company.
There was an increase of 201.78% in other operating income of the Company from Rs 558.159 million for the period ended March 31, 2010 to Rs 1,684.406 million (for the period ended March 31, 2011). This increase was 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.
Furthermore, due to effective cost curtailment measures, the increase in distribution and administrative expenses was only 26.62% and 18.81% respectively despite 56.14% increase in sales.
Similarly, owing to excellent profit of the financial year 2009-2010 and better funds management, the Company limited the increase in its finance cost to 49.50% only (March 2010: Rs 808.800 million, March 2011: Rs 1,209.133 million) from the previous corresponding period.