Lucky Core Industries’ Profits Surge 101% in FY23 Despite Q4 Losses

Lucky Core Industries Limited (PSX: LCI) announced its results for the financial year ended June 30th, 2023.

The company (formerly ICI Pakistan Limited) posted a consolidated profit after tax (PAT) of Rs. 17.7 billion (EPS: Rs. 190.15), up by 101 percent year on year (YoY) compared to Rs. 8.46 billion (EPS: Rs. 91.66) during the same period last year (SPLY), attributable to PAT from discontinued operations of Rs. 10 billion which mainly includes gain recorded on account of sale of shares of NMPL and re-measurement of the remaining 24.5 percent shareholding of NMPL in accordance with the relevant IFRS.

In 4QFY23, it posted a loss after tax of Rs. 4.4 billion due to tax charged on the sale of shares and re-measurement of the remaining 24.5 percent shareholding of NutriCo Morinaga Private Limited worth Rs. 7.1 billion, according to Arif Habib Limited (AHL).

On a consolidated basis (including the result of the Company’s subsidiary Lucky Core PowerGen Limited), the net turnover for the year under review from continuing operations at Rs. 109.5 billion is higher by 26 percent YoY over SPLY due to higher sales across all segments which supported the overall jump, according to AHL.

Meanwhile, the operating result from continuing operations at Rs. 14.76 billion is higher by 24 percent against SPLY.

Gross margins went down by 115 basis points YoY to 20.5 percent during FY23. The decline in gross margins was led by higher coal prices (+33 percent YoY).

Finance costs of the company went up by 252 percent YoY to Rs. 2.88 billion during FY23 due to augmented short-term borrowing along with higher interest rates.

The company recorded a gain on account of the sale of shares and re-measurement of the remaining 24.5 percent shareholding of NutriCo Morinaga (Pvt) Limited worth Rs. 10 billion during FY23.

During FY23, LCI booked an exchange loss of Rs. 966 million amid PKR depreciation of 28 percent YoY during the year.

LCI also announced a cash dividend of Rs. 33.0 per share, taking the full-year dividend per share to Rs. 43.0 per share.

At the time of filing, the company’s scrip at the bourse was Rs. 671.99, down by 1.7 percent or Rs. 11.6 with a turnover of 10,904 shares on Thursday.

Tough Year

During the year, the Company was severely impacted by macroeconomic challenges, including demand contraction in the downstream markets, cost-push due to the impact of higher oil prices, exchange losses due to devaluation of the PKR against the US Dollar, business-specific import restrictions, and tax regime changes.

Additionally, monetary tightening measures by the Government of Pakistan including a significant increase in interest rate against the SPLY also continued to impact the business and its profitability.

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