Millat Tractors Limited, which is the largest tractor manufacturing company in the country, announced its financial results for the first quarter ended September 30, 2020 (FY-21).
The tractor manufacturer posted an unconsolidated profit of Rs. 1.13 billion, up by 219% or 2.19x as compared with last year’s profit of Rs. 356 million. The company reported sales of Rs. 8.51 billion, showing an increase of 67% as compared to Rs. 5.09 billion in the same period last year.
The results were above the industry expectations. Overall tractor sales clocked in at 7,225 units during the first quarter, depicting a 50% increase as compared with last year and 19% increase quarter on quarter. The gross margins of the company further improved to 22% during the quarter as compared with 4QFY20.
The other income was increased to Rs. 70 million, up by 202% as compared to Rs. 23 million in the same period last year. The finance cost came down by 97% to Rs. 1 million from Rs. 27 million as the burden of the short-term borrowings to manage its working capital requirements has significantly decreased.
The earnings per share of the company increased to Rs. 22.78 from Rs. 7.15. MTL’s share at the bourse was closed at Rs. 979, up by Rs. 57.80 or 6.27%, with a turnover of 358,650 shares on Monday.
Post lockdown business activity has picked up quite a bit in the entire auto sector of Pakistan. Here, the trajectory for Millat Tractors has been quite similar to that of Atlas Honda, whereby the forced closure of business only resulted in the demand to rise even higher. And so, once the lockdown concluded, the manufacturer started recording incredible production and sales figures.
However, with the winter season fast approaching, whereby the use of tractors slows down significantly, we are likely to see a downward trend in the demand for tractors. Still, Millat being the manufacturer of the most reliable Massey Ferguson tractors in the market is still bound to stay ahead of the competition.