PHOTO: EXPRESS
KARACHI: Amreli Steels Limited (ASTL) has posted after-tax profit of Rs409 million for the first quarter ended September 30, 2018, up 109% compared to Rs195 million in the same quarter last year mainly due to higher prices and volumes.
Sales revenue rose 119% on the back of 27% year-on-year increase in average prices with production likely to have gone up 22,000 tons, according to Taurus Research. However, gross margins fell 3.51 percentage points as higher average selling prices were largely offset by almost 40% year-on-year rise in the scrap cost.
Steel units in capital contributing to air pollution
Rupee depreciation to the tune of 17% during the year and hike in fuel and power costs due to higher gas prices and gas infrastructure development cess (GIDC) led to a 128% year-on-year rise in the cost of production. Earnings, nevertheless, rose due to 78% hike in gross profit and 2.9% effective tax credit as the company utilised the tax credit available on its new Dhabeji rolling mill.
Finance cost swelled 115% on a year-on-year basis mainly due to increase in borrowing and a 69% rise in distribution and administration expenses because the company focused on expanding its presence in the northern region.
Smoke-spewing factories add to capital pollution
On a sequential basis, the premium steel supplier registered a decline in earnings of about 31% quarter-on-quarter due to 37% higher finance cost and a low tax base in the previous quarter.
According to BMA Research, the key risks for the company include unexpected depreciation of the rupee, a steep rise in scrap prices and more-than-expected slowdown in construction activity.
Published in The Express Tribune, October 27th, 2018.
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