Service Industries Limited (SIL), one of the country's prominent footwear retailers which have also diversified into rubber-related businesses, has performed pleasantly in the 1HCY15.
As per KSE notice on Thursday, the firm reported a nine percent year-on-year growth in its top line. The bulk of SILs top line still comes from its flagship footwear business.
SIL was able to keep its core costs under control and took advantage of depressed global commodity prices. Europe is the primary export destination for the company. That is why the company has suffered negative impact on its exports due to the weakening of the Euro; especially during the first quarter. This put pressure on its gross profit margin that has grown by just 100 bps.
Operating expenses were primarily kept low except other expenses which as a percentage of net sales have risen by 1300 bps.
This surge in other expenses is attributable to employee-related costs. As the Director's Report is not yet available, it is not clear why this expense head has mushroomed.
The better performance in its top line helped SIL to improve its bottom line by 19 percent and closed the period with a net profit of Rs568 million which corresponds to a healthy EPS of Rs47.26.
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SERVICE INDUSTRIES LIMITED
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Rs (mn) 1HCY14 1HCY15 YoY
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Sales net 8,354 9,147 9%
Cost of sales 6,879 7,448 8%
Gross profit 1,476 1,698 15%
Distribution cost 386 389 1%
Administrative expenses 317 371 17%
Other operating expenses 70 87 24%
Other operating income 54 80 49%
Operating profit 756 932 23%
Finance cost 162 173 7%
Profit before taxation 594 759 28%
Taxation 118 191 62%
Profit after taxation 476 568 19%
Earnings per share 39.57 47.26 19%
Gross profit margin 18% 19% up 100
bps
Operating profit margin 9% 10% up 100
bps
Net profit margin 6% 6% -
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