Nishat Mills ltd announced its 2020 Annual financial result where its Net Profitability declined to PKR3.5 Billion as compard to PKR 5.859 Bilion in last year, marking a 40% YoY decline.
The earnings decline is due to short term revenue hit owing to COVID-19 (-21%YoY), Weak core margins and absence of dividend income from the power holdings.
NML’s Gross Revenue declined by 4% to PKR 60.9 billion as compared to PKR 63.5 Billion in last year. Export-oriented sectors in general and textiles, in particular, faced double impact of COVID-19, with both demand and supply disruptions making operations difficult for them. Advanced order book which was usually booked for up to 6 months reduced to a few days. New orders received were primarily of PPE related fabric, which is both non-repetitive and low margin products.
Income from Portfolio companies, which historically provided the cushion to NML during the stressed times of core textile business also face structural and cyclical headwinds, with COVID-19 increasing the liquidity stress in power sector and swift easing by SBP leading to downward revision in payouts from MCB.
On consolidated basis, Gross revenue declined to PKR 88.7 Billion as compared to PKR 96 Billion in last year. Net Consolidated Profit declined to PKR 8.77 Billion as compared to PKR 9.65 Billion in last year, marking significant decline primarily from Core Textile Operations.
Analysts are of he view that despite near-term challenges NML is relatively better positioned to weather the COVID crisis due to vertically integrated textile operations and diverse income stream from the portfolio companies.
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