Lahore August 30 2023: Pak Elektron Limited (PAEL), leading brand of home appliances and power transformers in Pakistan, profit plunged 53.8 percent as company sales drop due to economic slowdown.
During the half year (Jan Jun) year on year production of Refrigerators & Air Conditioners was lower due to the import restrictions. Imposition of further electricity tariffs also tapered down the overall electricity consumption and thus affecting demand for power division products.
During 1HFY23, the Company reported total revenues of PKR 25,744 Million with 34.85 percent decrease as compared to the same period last year. Despite, one of highlights of 1H FY 23 results, the Gross Profit percentage of the Company improved to 26.03 percent (as percentage of Net Sales) from 19.53 percent of last year, the high imported material costs due to global commodity price hike and PKR depreciation against the greenback translated into company's gross profit reporting at PKR 5,394 Million, a decrease of 11.62 percent from PKR 6,103 Million of the previous year same period.
Profit after taxation also shrinked by 53.80 percent and clocked in at PKR 529 Million. Earnings per share is PKR 0.59 against PKR 1.65 of the last year corresponding period. Products demand slump is mainly due to stressed economic activity and decrease in disposable incomes. The Company has reduced its total borrowing significantly mainly on account of efficient working capital management however, profitability shrinkage is also due to higher finance cost due to constant increase in interest rates.
Appliances Division
Due to "Overall Economic Slowdown" and stringent import restrictions, Home Appliances Division witnessed a major dent in revenue by 51 percent in 1HFY23. Home Appliances Division revenues were down to PKR 11,989 Million versus PKR 24,497 Million during the corresponding period last year. This revenue shrinkage is mainly attributable to import restrictions curtailing the supply side, high inflationary pressures and lower disposable income. The limit placed on imported raw material proved to a major hindrance coupled with weaker local currency.
Power Division
The stressed economic environment due to growing hefty circular debt in Power Division is touching highly undesirable levels. Circular Debt soar is due to electricity T&D infrastructure losses, electricity pilferage and billing recovery losses. The solution to the issue is T&D infrastructure augmentation and temper free metering system supporting efficient billing collections.
During the period under review power division business revenues registered at PKR 13,754 Million, a dip of 8.41 percent over PKR 15,017 Million of previous year six months. The revenue decrease is mainly due to import restrictions placed by the administration where raw material supply was limited causing a major hindrance in production of transformers etc.
Further manufacturing capacities of all power division products are greatly sufficient to meet growing demand. It is expected that revenue and profit will revert back as import restrictions are easing out and also the economy stabilizes following the pending elections.
Company since its inception in year 1956 is engaged in manufacturing and sales of "Electrical Equipment" and have developed an outstanding set of capabilities including an out class team of professionals, state of art manufacturing & testing facilities and a prolonged "Customers Relationship" history with WAPDA utility companies. Having this great set of capabilities, company is quite confident to further escalate its stature as "Key Market Player".
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