Mughal Iron & Steel Industries Limited (PSX: MUGHAL) announced its Full Year Financial Results for FY2023 where it reported a 4QFY23 Net Profit of PKR 0.8 billion (EPS: PKR 2.48), marking a 20% year-on-year decline and a 36% quarter-on-quarter decrease.

For FY23, Net Profit amounted to PKR 3.5 billion (EPS: PKR 10.37), down 36% year-on-year. The announcement included a final dividend of PKR 3.20 per share.

MUGHAL’s Quarterly Revenue reached PKR 18.9 billion in 4Q, a 10% increase quarter-on-quarter but remained stable year-on-year. The sequential revenue rise, despite weak sales volumes, is attributed to price hikes and copper exports, aligning with our projections.

Gross margin stood at 16.2%, significantly surpassing our 12.7% forecast. This likely resulted from the accumulation of slower-moving inventory at a lower cost, boosting quarterly margins.

Finance costs surged by 78% year-on-year and 49% quarter-on-quarter to PKR 1.5 billion in 4QFY23, reaching PKR 4.4 billion for FY23, up 69% year-on-year, driven by higher interest rates.

Distribution expenses decreased by 65% quarter-on-quarter to PKR 19 million, likely due to reduced offtake during the quarter. The effective tax rate was 39% in 4QFY23 compared to 29% in the same period last year.

Despite sluggish demand and increased finance costs, MUGHAL achieved improved margins and earnings. Looking ahead, escalating construction expenses, high finance costs, and rising electricity expenses may exert downward pressure on earnings. However, copper exports remain a valuable hedge against potential further depreciation of the PKR.

Rupees’ millions4QFY234QFY22YoYFY23FY22YoY
Net Sales18,91118,9310.1% ▼67,39066,1531.9% ▲
Cost of Sales-15,854-16,3082.8% ▼-57,719-56,0253.0% ▲
Gross Profit3,0572,62316.5% ▲9,67110,1284.5% ▼
SG&A Expenses-192-23518.5% ▼-837-95111.9% ▼
Other Expenses-26-11577.0% ▼-388-56731.5% ▼
Operating Profit2,8382,27324.9% ▲8,4468,6111.9% ▼
Other Income4541209.6% ▼32421351.9% ▲
Finance Cost-1,517-85477.6% ▲-4,423-2,62268.7% ▲
Profit Before Taxation1,3671,4606.4% ▼4,3466,20229.9% ▼
Taxation-534-41927.4% ▲-866-7919.5% ▲
Profit After Taxation8331,04120.0% ▼3,4805,41135.7% ▼
Earnings Per Share2.3.1020.0% ▼ ▼
Dividend3. ▲
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