Amreli Steel Records a Huge Loss in Q3 FY2019

Amreli Steels Limited (ASTL) has announced its financial results for the third quarter that ended on March 31st 2019. The company posted a loss of Rs. 292 million, down from a profit of Rs 472 million in the prior year. This is the first quarterly loss of the company since FY2016.

This takes the nine months profit to Rs. 223 million which saw a significant 77.5% year-on-year plunge in earnings as compared with Rs. 997 million in the previous year. The company was unable to pass on the impact of the depreciation of Pakistani Rupee and higher energy prices.

During the quarter, the company’s loss possibly increased due to higher cost of sales which were posted at Rs. 6.09 billion, up by a massive 67.31% from Rs. 3.64 billion, with high finance cost and an increase in distribution costs which was up by 66.3% to Rs. 153 million.

However, the revenues were up by 30.74 to Rs. 6.4 billion as compared with Rs. 4.62 billion. Increase in revenue is mostly due to higher retention prices and increased volumes.

According to a brokerage house, despite an increase in volumes, the gross margins fell due to the devaluation of Pakistani Rupee against US dollar and downward pressure of retail prices.

Moreover, the loss was incurred due to the increase in finance cost which went up by 216% to Rs. 370 million owing to expansion projects of the company after borrowing  (both for plant and working capital) at high interest rates.

During the quarter, the company enjoyed a tax rebate of Rs 51 million in contrast to the tax payments of Rs 139 million in the same period last year, which provided a small relief to the earnings.

The company posted a loss per share of Rs. 0.99 from earning per share of Rs. 1.59 in the prior year.

At the time of filing this report, ASTL’s shares at the bourse were trading at Rs. 32.50, up by Rs. 0.20 or +0.62% with a turnover of 567,000 shares on Monday.