Gul Ahmed Textile Mills Limited (GATM), a manufacturer of textile products, reported a massive fall in profits in fiscal year 2022-23, largely driven by a high cost of sales and finance costs.
In a consolidated statement released to the Pakistan Stock Exchange (PSX) on Tuesday, the company posted a profit after tax of Rs4.88 billion, a decrease of over 50% against Rs9.85 billion recorded in the same period of the previous year.
Resultantly, earnings per share of GATM in FY23 declined to Rs6.62 compared to Rs13.3 in the same period last year.
The textile manufacturer saw its total revenue grow by 14% to Rs138.93 billion from Rs121.81 billion recorded in the SPLY. However, despite higher sales, the profit margin of the company reduced to 20% in FY23, as compared to 22.2% in the same period of the previous year, on account of high cost of sales.
On the other hand, the company’s operating expenses were up nearly 19% year-on-year, to Rs14.69 billion in FY23.
The company’s other income showed a decline of nearly 17% YoY, hitting Rs821.87 million in FY23, compared to Rs986.92 million in SPLY.
Meanwhile, the company’s cost of finance jumped to Rs7.32 billion in FY23, an increase of 85%. The increase comes as interest rates increased significantly during the year.
In a related development, the Board of Directors of GATM in their meeting decided to reclassify a sum of Rs23 billion from the revenue reserves to separate capital reserves (un-distributable by way of dividend) to more accurately reflect the nature of these reserves.
The development comes as the BoD discussed that over the years the company has continued with its expansion and diversification strategy and made significant investments which have enhanced enterprise value for the shareholders.
The Board noted that because of these reasons, the unappropriated profits of the company have been utilised and are not entirely available for distribution as dividends.