Al-Ghazi Tractors reports flat profit, pays high dividend

KARACHI: Al-Ghazi Tractors Limited (AGTL) posted flat net profit at Rs1.59 billion for the year ended December 31, 2015 as farmers put purchase orders on hold, waiting to avail the announced government subsidy on tractors, analysts said on Friday.

The net profit is just one percent higher from Rs1.57 billion in the previous calendar year of 2014. Accordingly, the earning per share recorded at Rs27.47 as compared to Rs27.17 last year, the firm announced at the Pakistan Stock Exchange (PSX).

The tractor manufacturers, however, surprised shareholders, as its board of directors recommended final cash dividend at Rs25/share. This was in addition to interim dividend already paid at Rs60/share. Last year, it paid cash dividend at Rs25/share.

"The company paid out significant higher cash dividend than earnings given its large cash balance," said Muhammad Tahir Saeed at Topline Securities.

"…first half of 2015 was extremely good before the announcement of subsidy schemes in June 2015. However, this growth momentum reversed after the announcement of schemes in June, thus, sales volumes plunged by 48 percent in second half of 2015. Resultantly, earnings remained fairly flat," he said.

To recall, provincial governments of Punjab and Sindh had announced subsidy schemes to provide 25,000 and 29,000 tractors respectively at subsidised rates in their budgets of fiscal year 2016. However, the schemes have been delayed substantially, stalling the momentum of sales as farmers deferred their normal buying in anticipation of subsidised tractors, Saeed said.

"Further, significant decline in commodity prices, particularly agricultural commodities hassubstantially reduced the purchasing power of farmers, we believe," he said.

The sales in rupee denomination, however, surged almost 10 percent in the year under review at Rs9.63 billion from Rs8.78 billion last year. The cost of sales also rose 10 percent to Rs7.13 billion from Rs6.51 billion.

Millat Tractors’ profit drops 51pc in half-year

Millat Tractors Limited reported a 51 percent drop in its net profit to Rs571.76 million for the half-year ended December 31, 2015 on the back of significant decline in sales, analysts said.

The firm booked net profit of Rs1.17 billion in the same half last year. Accordingly, the earning per share remained at Rs12.91 in the half under review, as compared to Rs26.58 in the corresponding period, the company announced at the PSX.

Board of directors has recommended interim cash dividend at Rs20/share.

The sales decreased 36 percent to Rs6.47 billion from Rs10.16 billion. Besides, the cost of sales surged 15.18 percentage points to 95.93 percent (or Rs5.44 billion) of the sales from 80.75 percent (or Rs8.21 billion) in the corresponding period.

The other income declined 38 percent to Rs170.40 million from Rs273.89 million. And finance cost 102 percent to Rs8.83 million from Rs4.35 million in the half in 2014.

In the quarter ended December 31, 2015, the net profit dropped 54 percent to Rs319.55 million (earning per share at Rs7.21) from Rs689 million (earning per share at Rs15.56) in the same quarter last year.

Cherat Cement profits Rs676mln in half-year

Cherat Cement Company Limited's net profit remained steady at Rs676.20 million in the half-year ended December 31, 2015, as price of coal and oil remained low at the world markets, analysts said on Friday.

The net profit is six percent higher than Rs639.89 million in the same period in 2014.

This translated into earning per share of Rs3.83 in the under-review half-year as compared to Rs4.41 in the same period last year, the firm announced at the Pakistan Stock Exchange.

The board of directors has recommended interim cash dividend of Re1 / share for shareholders whose names will appear in the register of members on February 26, 2016.

It added in its bourse filing that the company intends to make an investment of up to Rs100 million by acquiring the shares of Cherat Packaging Limited from the stock market.

The investment will be made subject to the consent and approval of the shareholders at the extraordinary general meeting.

"The increase in sales volume along with significant reduction in cost (down Rs28 / bag) based on lower coal and oil prices has contributed to this end," Syeda Humaira Akhtar at KASB Securities said in a commentary.

"The commissioning of new grey cement line with a capacity of 1.3 million tons by December 2016 along with an addition of 6-megawatts Waste Heat Recovery (WHR) will likely enable the company to post above industry average volume growth and earnings," she added.

The sales surged five percent to Rs3.48 billion from Rs3.31 billion last year.

Cost of sales dropped 5.13 percentage points to 65.70 percent (or Rs2.29 billion) of the sales from 70.83 percent (or Rs2.34 billion) in the corresponding period.

The other income and finance charges decreased 68 percent and 26 percent, respectively, to Rs21.98 million and Rs15.76 million.