Lucky Core Industries’ Profits Slump 44% During 2nd Quarter of FY23

Lucky Core Industries Limited (PSX: LCI) announced its results for the 2nd quarter/half year ended December 31st, 2022.

The company (formerly ICI Pakistan Limited) posted a profit after tax (PAT) of Rs. 1.226 billion (EPS: Rs. 13.27). down by 44 percent year on year (YoY) compared to Rs. 2.18 billion (EPS: Rs. 23.69) during the same period last year.

LCI announced a cash dividend of Rs. 10 per share along with the result.

The decline in earnings is witnessed due to lower PSF margins along with higher finance costs. This takes 1HFY23 earnings to Rs. 3.026 billion (EPS: Rs. 32.76), down by 48 percent YoY, according to a report by Arif Habib Ltd.

Higher finance costs and the absence of a gain on the re-measurement of existing interest in NutriCo Pakistan (Rs. 1.85 billion during 10FY22) remained the primary reason for this decline. Also on a quarter-on-quarter (QoQ0 basis, earnings were down by 32 percent.

During 2QFY23, net sales surged up merely 1 percent YoY to Rs. 25.3 billion from Rs. 25.15 billion due to higher sales across all segments, which supported the overall jump. However, sales of NutriCo Morinaga were not included in the results for the period under review due to a change in its classification from a subsidiary to an associate.

The gross margins of the company went down by 652 basis points YoY to 16.2 percent during 2QFY23. The decline in gross margins was led by higher coal prices along with lower PSF margins.

During 2QFY23, LCI booked an exchange gain of Rs. 16 million due to PKR appreciation. Moreover, the finance costs of the company went up by 114 percent YoY or 20 percent QoQ to Rs. 575 million during October-December FY23 due to augmented short-term borrowing along with higher interest rates.

The finance cost of the company went up by 114 percent YoY to Rs. 575 million compared to Rs. 269 million due to augmented short-term borrowing along with higher interest rates.

The company registered an effective tax rate of 33 percent in 2QFY23 settled compared to 27 percent during 2QFY22, given the imposition of Super Tax through the Finance Act, 2022.

At the time of filing, LCI’s scrip at the bourse was Rs. 545, up 1.83 percent or Rs. 9.77 on Thursday.