Image Pakistan (IMAGE) announced its 2QFY24 result today, posting consolidated earnings of Rs65mn (EPS of Rs0.49), down 27% YoY and 64% QoQ. This takes 1HFY24 earnings to Rs88mn (EPS of Rs1.87), up 43% YoY. In 2QFY24, the decline in YoY and QoQ earnings is primarily due to lower gross margins and higher effective tax rates.

Gross margins declined to 41% in 2QFY24, compared to 43% in 2QFY23 and 47% in 1QFY24. The decline in gross margins is primarily due to seasonal effects, where the company had to offer discounts on Christmas and Black Friday to clear seasonal ending stocks, as per management.

Effective tax rate clocked in at 41% in 2QFY24, compared to 8% in 2QFY22 and 6% in 1QFY24. The higher tax expense in 2QFY24 is due to the absence of depreciation tax allowance, which the company recorded in the initial years of CAPEX, as per management.

IMAGE recorded a topline of Rs875mn in 2QFY24, up 10% QoQ and 67% YoY. This takes 1HFY24 sales to Rs1,669mn, up 60% YoY.

Finance cost rose by 243% YoY and 20% QoQ, attributed to higher interest rates and increased borrowings by the company.

The company announced 75% right shares at Rs10 per share along with the results. As per the notice, the funds will be utilized to finance the expansion of production capacity and meet working capital needs, ensuring sustained business growth.

Courtesy – Topline Pakistan Research