KARACHI: International Steel Limited (ISL) has disclosed a 20 percent decrease in profit after tax for the first half of the fiscal year ending on December 31, 2018.
The financial results, submitted to the Pakistan Stock Exchange (PSX) on Monday, indicate a net profit of Rs1.75 billion for the period July-December 2018, down from Rs2.2 billion in the corresponding period of the previous year.
While net sales of the company demonstrated growth, reaching Rs24.78 billion during the first half of the current fiscal year compared to Rs22.2 billion in the same period of the last fiscal year, rising costs impacted the gross profit. The cost of sales increased to Rs21.71 billion from Rs18.39 billion, resulting in a decline in gross profit to Rs3.06 billion for the first half of the current fiscal year, down from Rs3.8 billion in the corresponding period of the previous year.
The increase in the cost of sales is indicative of various factors, including fluctuations in raw material prices, energy costs, and other operational expenses. Companies in the manufacturing sector, such as ISL, are often vulnerable to these cost pressures, which can impact their profitability.
The company’s tax payments during the first six months of the current fiscal year amounted to Rs267.4 million, a significant decrease from the Rs858 million paid in the same period of the last year. This reduction in tax payments may have provided some relief to the company amidst the challenging economic environment.
Earnings per share (EPS) for the period under review were declared at Rs4.02, compared to Rs5.02 EPS in the same period of the last fiscal year. The decline in EPS further reflects the impact of increased costs on the company’s overall profitability.
The financial challenges faced by ISL underscore the dynamic nature of the steel industry, where companies must navigate fluctuating market conditions, global economic trends, and industry-specific challenges. External factors such as changes in international steel prices, demand-supply dynamics, and geopolitical developments can influence the performance of steel companies.
In response to these challenges, companies in the steel sector often focus on operational efficiency, cost management, and strategic planning to ensure sustained profitability. Periods of economic uncertainty and cost pressures may prompt companies to reassess their business strategies and explore opportunities for optimization.
ISL’s financial performance in the first half of the fiscal year will be closely monitored by industry analysts and stakeholders. The company’s ability to address cost pressures, adapt to market dynamics, and implement effective strategies for growth will be crucial for its future performance in a competitive and dynamic industry landscape. As the company navigates these challenges, it will be essential to maintain a balance between operational efficiency and financial resilience to secure long-term success in the steel market.
