Sitara Chemical Industries Limited (PSX: SITC) reported a net profit of Rs155.33 million for the quarter ending September 2024, reflecting a 23% decrease from Rs201.72 million in the same quarter last year (SPLY). The earnings per share (EPS) for Q1 FY25 stood at Rs7.25, down from Rs9.41 in the corresponding period last year.
The company’s revenue remained relatively stable at Rs7.61 billion compared to SPLY, while gross profit declined marginally by 1.1% to Rs1.17 billion. This decrease was attributed to rising input costs, which led to a slight dip in gross margins from 15.6% in Q1 FY24 to 15.4% in the current quarter.
Key Financial Highlights
- Revenue: Sales revenue saw a negligible decline of 0.08%, reaching Rs7.61 billion.
- Gross Profit: A minor decline of 1.1% brought gross profit to Rs1.17 billion, with gross margins slightly narrowing due to increased production costs.
- Other Income: Other income grew by 29.9%, reaching Rs73.87 million, mainly due to gains from non-operational sources.
Rising Expenses Impacting Profitability
On the expense front, Sitara Chemical faced increases across several categories:
- Administrative Expenses: These rose by 10.3% year-on-year to Rs289.62 million.
- Selling and Distribution Expenses: These saw a decrease of 5.4% to Rs128.21 million, reflecting cost-management efforts.
- Finance Cost: The finance cost increased sharply by 17.3%, totaling Rs607.79 million due to elevated interest rates.
The increased finance cost, along with higher administrative expenses, played a significant role in the decline in net profit.
Lower Tax Expense
The company’s tax expense was reduced by 51.0%, amounting to Rs49.62 million, in contrast to Rs101.2 million in the previous year. This decrease led to a lower effective tax rate of 24.2% for Q1 FY25, compared to 33.4% in Q1 FY24, providing some relief to the bottom line.
