The Interloop management held analyst briefing today to discuss company’s performance post release of 1QFY21 financial results and its strategy going forward.
Brief Takeaways
· Interloop Limited (ILP) posted profit after tax (PAT) of PKR 1,382mn (EPS: PKR 1.58), up by 2.2x YoY in 1QFY21, compared to PKR 619mn (EPS: PKR 0.71) in same period last year.
· Net sales of the company increased by 38% YoY during 1QFY21 to PKR 12.9bn due to i) hosiery utilization at 100% post revival of economic activity, ii) increase in utilization of the denim plant given addition of new customers, and iii) addition of new machineries in its hosiery division.
· Hosiery division is still operating at full capacity utilization and ILP will continue this utilization level for the entire year as it has enough orders.
· The company said it has added some reputable customers in denim segment which has improved its utilization level. Furthermore, denim segment is expected to be break-even from April’2021.
· Denim plant phase 2 of 20,000 pcs/day will become operational in last quarter of FY21.
· Average selling price of socks increased to USD 5.37/dozen in 1QFY21 compared to average of USD 4.86/dozen in FY20.
· Upon completion, both denim and hosiery plant are expected to generate more sales, and profits because of economies of scale.
· The future prospects of the company are encouraging because its order books are very healthy for current financial year and so far it has not seen any impact of second wave of Covid-19.
· New textile policy will be beneficial as this upcoming policy will support SMEs and will allow consistency in government policies for the next five years.
· On GIDC front, ILP has paid all the amount on time and there are no outstanding payments.
· Imported raw material consists of 25% to 30% of total raw material cost.
· Company decided to divest its investment from Interloop Bangladesh.
· The company has cotton inventory for the entire year as it has procured cotton early during harvesting season.
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