Topline Pakistan Research has reported on the Sazgar Engineering (SAZEW) results for FY25, highlighting an earnings per share (EPS) of Rs 270.22, which reflects a year-over-year increase of 2.06 times. However, this outcome fell short of industry expectations. SAZEW announced its FY25 results, reporting a profit of Rs16.3 billion, corresponding to an EPS of Rs270.22, marking a 2.06 times increase compared to the previous year.
During the first quarter of FY25, the company reported a profit of Rs 3.5 billion (EPS of Rs 57.58), which was relatively flat year-over-year and down 44% quarter-over-quarter. This result was below industry expectations, primarily due to lower-than-anticipated gross margins.
The gross margins for the first quarter stood at 25.1%, compared to 29.1% in the previous quarter and 32.6% in the same quarter last year. Consequently, FY25 gross margins were reported at 29.1%, an improvement from 27.1% in FY24. We await further detailed accounts to understand the reasons behind this significant decline in the fourth quarter of FY25.
In conjunction with the results, the company announced a dividend of Rs20 per share in the first quarter, bringing the total dividend for FY25 to Rs52 per share, resulting in a payout ratio of 18%.
Net sales surged by 18% year-over-year but declined by 26% quarter-over-quarter to Rs27.3 billion in the first quarter. This trend was largely driven by an increase in four-wheeler sales, which rose 28% year-over-year but fell 24% quarter-over-quarter, with sales amounting to 2,817 units compared to 2,202 units in the previous quarter and 3,686 units in the same quarter last year (the latter due to the sales accumulated in December and January recorded in January). Three-wheeler sales also rose by 25% year-over-year but dipped 24% quarter-over-quarter to 6,258 units in the first quarter, compared to 4,992 units in the previous quarter and 8,216 units in the same quarter last year.
Distribution expenses increased by 16% year-over-year but decreased by 15% quarter-over-quarter. Administration and other expenses declined by 5% and 7% year-over-year and by 40% and 44% quarter-over-quarter, respectively.
Other income decreased by 33% year-over-year but rose by 7% quarter-over-quarter to Rs320 million in the first quarter. The effective tax rate in the first quarter was 39%, compared to 40% in the previous quarter and 39% in the same quarter last year, resulting in a full-year 2025 tax rate of 39%.
Furthermore, the Board has decided to discontinue the Home Appliances business, effective September 1, 2025, to focus on core, profitable segments. We believe this strategic shift will have no impact on net sales or overall profitability.
