In a recent analyst briefing, Al-Ghazi Tractors Ltd. (AGTL) announced its financial results for calendar year 2024 (CY24), showcasing impressive earnings despite facing challenges in sales volume. The company reported earnings of PKR 3.5 billion, translating to an earnings per share (EPS) of PKR 61.1. This marks a significant increase from PKR 2.6 billion (EPS: PKR 45.1) in CY23, primarily driven by improved gross margins, which rose to 24% compared to 19% during the same period last year.
However, the company’s topline revenue for CY24 saw a stark decline, totaling PKR 3.6 billion, a 62% decrease compared to PKR 9.5 billion in the previous year. The decrease is largely attributed to lower sales volumes amid challenging agro-economic conditions. Despite these hurdles, AGTL has received PKR 2.5 billion in outstanding dues from the Punjab Government under the Punjab Green Tractor Scheme, offering some relief.
Management noted a shift towards lower-horsepower tractors due to the current economic landscape in agriculture. However, they remain optimistic about a rebound in sales of higher-horsepower tractors, especially with the Punjab government’s announcement of two new tractor schemes worth PKR 5.5 billion and PKR 10 billion in the FY26 provincial budget. Each scheme is expected to provide subsidies of PKR 0.5 million for lower-horsepower tractors and PKR 1 million for higher-horsepower models.
The anticipated allocation of 20,000 tractors under these schemes, which accounted for 50% of total tractor sales last year, could significantly boost the sector outlook.
In product developments, AGTL has launched its new tractor model, the NH-850, in two variants: Base and Lift-o-matic. Following a positive consumer response, an improved version of the Lift-o-matic variant has been introduced.
Management expects the completion of its research and development center by the end of 2025, signaling a commitment to innovation amid changing market conditions. They also indicated that unpaid dividends are currently pending due to the State Bank of Pakistan’s approval processes. The company plans to focus on reinvestment in its factory rather than distributing dividends in the near term, reflecting its strategy amidst declining sales volumes.
For now, AGTL remains focused on navigating the challenges of the agro-economy while positioning itself for future growth, bolstered by governmental support and new product offerings.
*Courtesy – AKD Research*
