PAKISTAN: Nishat Mills reports increase in sales but drop in profit

LAHORE: The Nishat Mills Limited (NML) reported sales worth Rs 17 billion in 2007 following an excellent growth after a nosedive during 2005.

This increasing sales trend is attributed to expansion on its value-added products divisions consisting of stitching, dyeing and finishing coupled with the added capacity.

However, this was not reflected in the company's net profit. Nishat Mills earned net profit of Rs 1,674 million this year, thus showing a decrease of 2.53 percent as compared to Rs 1634 million for the previous year.

The sudden fluctuations in domestic cotton market, high cost of raw material, increased processing charges and high gas tariffs are the main causes which has dented the profitability of Nishat Mills Limited.

Nishat Mills made major expansion during the financial year 2007. The company has acquired new finishing equipments and is in the process to expand stitching, dyeing and finishing.  This is vital to stay ahead of the competition and to continue the existing growth pattern.

Nishat Mills Limited is the largest textile composite unit of Pakistan. It has the significant free-float of about 44.1 percent in equity markets.

NML's interest covering ability has been affected adversely due to rising interest rates. The (P/E) ratio shows how much investors are willing to pay per rupee of the reported profits, depends on the company's price per share and it's Earning Per Share (EPS).

The government has announced a reduction in the presumptive taxes on textiles exports to 1.0 percent from 1.5 percent. Moreover, the spinning sector has been granted much demanded loan swaps in the current budget. These governmental steps for the promotion of the textiles industry and its exports, coupled with recent incentives in the budget and trade policy, could facilitate NML in becoming the best company of the textile sector in Pakistan.

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Added: December 3, 2007 Source: Agencies
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