Ghandhara Tyre & Rubber Company Ltd. (GTYR) held its analyst briefing today to discuss FY24 and 1QFY25 results and its future outlook. The following are the key highlights:
- The company achieved its highest-ever sales in FY24, posting a topline of PkR20.5bn in FY24 compared to PkR15.0bn in SPLY, an increase of 37% year over year.
- Earnings for the year clocked in at PkR229mn (EPS: PkR1.88) compared to a loss of PkR167mn (LPS: PkR1.37) in FY23. The improvement in earnings is attributable to the absence of import restriction by the SBP causing charges on bank contracts and open account payments and stability in currency compared to SPLY.
- Finance costs for FY24 were PkR1.7 bn compared to PkR1.3bn in FY23, due to higher financing rates, which impacted profitability.
- Earnings for 1QFY25 were PkR21mn compared to PkR70mn in SPLY, a 70% year-over-year decrease. Management attributed the decrease in earnings to a 20% year-over-year decline in sales due to lower tractor sales amid reduced agricultural activity.
- Moreover, the decline in tractor tyre sales was attributable to the plant shutdown of a key customer amid an ongoing sales tax dispute with the government. However, with the introduction of the Green Tractor scheme in Punjab, management anticipates sales to improve gradually.
- The management informed that the government had implemented certain measures to combat smuggling. However, consistent enforcement of these measures is essential for their effectiveness.
- The company has entered into a seven-year technical agreement with Shandong Huasheng Rubber Co. Ltd, one of China’s leading tyre manufacturers.
- The company currently produces 17-inch tyres for the SUV segment. However, a capital expenditure would be required to manufacture 18-inch tyres.
- Management plans to entre the off-road (OTR), excavator and EV segments.
- Moving forward, management expects demand to improve due to declining auto financing rates.
- Management has agreed with KE to install a 2MW solar unit.
Courtesy – AKD Research
