ISLAMABAD (ABC) – The net profit of Bannu Woollen Mills Limited grew exponentially by 567.3% to Rs346.3 million during the first half of the ongoing fiscal year (1HFY24) compared to the corresponding period of the previous fiscal, reports WealthPK.
However, the company’s revenue fell 10.7% to Rs769.9 million in 1HFY24 from Rs862.2 million in IHFY23.
The contributing factor for this reduction was rising inflation, which affected the consumers’ purchasing power.
According to the company’s unconsolidated statement, the gross profit contracted by 15.53% to Rs191.4 million in 1HFY24. However, the administrative expenses expanded by 28.89% during the period under review.
| Bannu Woollen Mills Limited – Profitability – 1HFY23 vs 1HFY24 | |||
| Particulars | 1HFY23 | 1HFY24 | Percentage Change |
| Revenue | 862,238,000 | 769,994,000 | -10.7% |
| Gross profit | 226,621,000 | 191,423,000 | -15.53% |
| Administrative expenses | -60,354,000 | -77,793,000 | 28.89% |
| Operating profit / (loss) | 144,202,000 | 104,142,000 | -27.78% |
| Net Profit/Loss after tax | 51,901,000 | 346,345,000 | 567.3% |
| Earnings per share | 5.46 | 36.43 | |
Furthermore, a reduction of 27.78% was witnessed in the operating profit during 1HFY24 compared to the same period last year.
The significant surge in net profit pushed the earnings per share to Rs36.43 in 1HFY24 from Rs5.46 in 1HFY23.
Quarterly analysis
The company’s net profit spiked a massive 675.4% to Rs371.3 million in 2QFY24 compared to the same quarter in FY23.
This caused an incredible jump in earnings per share, which swung to Rs39.07 in 2QFY24 from Rs5.04 in 2QFY23.
| Bannu Woollen Mills Limited – Profitability – 2QFY23 vs 2QFY24 | |||
| Particulars | 2QFY23 | 2QFY24 | Percentage Change |
| Revenue | 621,899,000 | 576,188,000 | -7.4% |
| Gross profit | 165,826,000 | 140,311,000 | -15.39% |
| Administrative expenses | -29,611,000 | -39,753,000 | 34.25% |
| Operating profit / (loss) | 119,063,000 | 97,830,000 | -17.83% |
| Net Profit/Loss after tax | 47,896,000 | 371,394,000 | 675.4% |
| Earnings per share | 5.04 | 39.07 | |
However, the company’s gross profit decreased by 15.39% and operating profit by 17.83% in 2QFY24.
On the other hand, administrative expenses increased by 34.25% in this quarter.
Financial position analysis
The company posted a growth of 12.77% in its non-current assets during 1HFY24, pushing them from Rs2.41 billion in June 2023 to Rs2.71 billion in December 2023.
This increase reflects the company’s interest in increasing its assets over the time period to secure its financial position in the market.
However, the current assets inched down to Rs1.20 billion in December 2023 from Rs1.23 billion in June 2023.
The total assets improved 7.69% to Rs3.92 billion in December 2023 from Rs3.64 billion in June 2023.
| Bannu Woollen Mills Limited – Financial Position Analysis | |||
| Particulars | June 30, 2023 | December 31, 2023 | Percentage Change |
| Non-current Assets | 2,410,250,000 | 2,717,952,000 | 12.77% |
| Current Assets | 1,231,653,000 | 1,203,945,000 | -2.25% |
| Total Assets | 3,641,903,000 | 3,921,897,000 | 7.69% |
| Total Equity | 2,843,631,000 | 3,189,976,000 | 12.18% |
| Non-current Liabilities | 214,496,000 | 236,811,000 | 10.40% |
| Current Liabilities | 583,776,000 | 495,110,000 | -15.19% |
The woollen company registered Rs3.18 billion worth of total equity at the end of December 2023, a 12.18% increase from Rs2.8 billion in June 2023.
The company’s non-current liabilities expanded by 10.40% during the period under review. The current liabilities stood at Rs495.11 million, 15.19% lower than Rs583.77 million in June 2023.
Ratios analysis
In 2020, Bannu Woolen Mills Limited posted a 32.86% gross profit margin, which was mainly on account of higher sales.
However, the gross margin reduced to 27.16% in 2021 and to 24.59% in 2022, but rebounded to 25.69% in 2023.
| Bannu Woollen Mills Limited- Ratios | ||||
| Particulars | 2020 | 2021 | 2022 | 2023 |
| Gross Profit Margin (%) | 32.86 | 27.16 | 24.59 | 25.69 |
| Net Profit/loss Margin (%) | -33.05 | 13.69 | -68.32 | -33.04 |
| EPS Growth (%) | -535 | 188.1 | -791.96 | 48.19 |
The company observed a net loss margin of 33.05% in 2020, 68.32% in 2022 and 33.04% in 2023.
This reflects that the company failed to generate ample revenues to earn profits. It registered a net profit margin of 13.69% only in 2021.
Throughout the four years, the company’s earnings per share growth showed a mixed trend as it recorded a loss per share of -535% in 2020 and -791.96% in 2022.
However, the company posted earnings per share growth of 188.1% in 2021 and 48.19% in 2023.
Future outlook
Rising inflation and operational costs due to frequent increases in fuel prices and energy tariffs present serious issues for the company.
Economic downturn affects the confidence of businesses. However, the reduction in public expenditures by the new government, a potential interest rate cut, more foreign investment and IMF help might result in economic stability.
Moving forward, the company expressed cautious optimism for the current fiscal year.
Company profile
Bannu Woollen Mills Limited was established in 1960. The company’s core operations are the manufacture and sale of woolen yarn, cloth and blankets.