The Searle Company Limited (PSX: SEARL) reported a significant loss of Rs3.33 billion [LPS: Rs6.95] for the fiscal year ending June 30, 2024, primarily due to a large impairment loss on its investment in a subsidiary. This compares to a profit of Rs302.14 million [EPS: Rs0.75] in the previous fiscal year (FY23).
Key Financial Highlights:
- Revenue: Sales increased by 19.3% to Rs25.83 billion in FY24, up from Rs21.64 billion in FY23.
- Gross Profit: Despite rising costs, the company’s gross profit saw a substantial 31.6% growth, reaching Rs12.56 billion, up from Rs9.54 billion in the previous year. Gross margins improved to 48.6%, compared to 44.1% in FY23.
- Expenses:
- Administrative expenses rose by 19.0% YoY to Rs1.47 billion.
- Distribution costs surged 30.2% YoY, amounting to Rs7.13 billion.
- Other operating expenses declined 55% YoY, standing at Rs29.39 million.
- Other Income: Fell sharply by 63.9% to Rs356.76 million from Rs987.73 million in FY23.
- Impairment Loss: The company reported a substantial impairment loss of Rs5.2 billion on its investment in a subsidiary, which was the main factor behind the poor financial results.
- Finance Costs: Increased by 6.4%, reaching Rs3.56 billion, driven by higher interest rates.
- Taxation: The company received a tax credit of Rs1.14 billion, compared to a tax payment of Rs107.7 million in the previous year.
Unconsolidated Financial Results (Rupees in ‘000):
| Description | Jun 24 | Jun 23 | % Change |
|---|---|---|---|
| Sales | 25,827,210 | 21,641,282 | 19.34% |
| Cost of sales | (13,270,821) | (12,097,595) | 9.70% |
| Gross profit/(loss) | 12,556,389 | 9,543,687 | 31.57% |
| Administrative expenses | (1,468,047) | (1,234,072) | 18.96% |
| Distribution cost | (7,126,326) | (5,474,092) | 30.18% |
| Impairment loss on investment | (5,200,000) | – | – |
| Other income | 356,759 | 987,731 | -63.88% |
| Other operating expenses | (29,386) | (65,315) | -55.01% |
| Finance cost | (3,560,883) | (3,348,104) | 6.36% |
| Profit/(loss) before taxation | (4,471,494) | 409,835 | -% |
| Final tax/levies | 1,140,635 | (107,698) | -% |
| Net profit/(loss) for the period | (3,330,859) | 302,137 | -% |
| Basic earnings/(loss) per share | (6.95) | 0.75 | – |
The impairment on the subsidiary investment was the key reason for the loss, despite overall growth in revenues and margins. The company’s finance costs also saw a rise due to increasing interest rates, and the drop in other income added further pressure on the bottom line.
