Millat Tractors Limited (MTL) announced its financial results for 1QFY25 today. The company posted a PAT of PKR 569mn (EPS: PKR 2.97), representing a 75% YoY decrease. The YoY decline can be attributed to a reduced sales volume stemming from diminished purchasing power among farmers due to unfavourable agricultural economic conditions and higher tractor prices. On a sequential basis, the earnings declined by 72% QoQ.

Result Highlights       

• Net sales during 1QFY25 clocked in at PKR 7.8bn, in contrast to PKR 20.7bn in SPLY, depicting a decrease of 62% YoY primarily due to low volumetric sales, with only 2,566 units sold in 1QFY25 compared to 7,187 units in 1QFY24. On a sequential basis, revenue declined by 64% QoQ amid a decline in sales volumes by 64% (4QFY24: 7,110 units).
• We view that gross margins in 1QFY25 arrived at 27.9% vis-à-vis 23.1% in 1QFY24, depicting an increase of 480bps due to a change in sales mix and stable PKR-USD parity.
• Other income declined by 61% YoY, clocking in at PKR 58mn in 1QFY25. This is mainly due to declining interest rates and a decline in cash and cash equivalent during the period.
• Finance costs surged by 2.8x YoY and were recorded at PKR 545mn in 1QFY25, in contrast to PKR 195mn during SPLY, primarily due to an increase in short-term borrowings.
• The company booked effective taxation at 40.6% in 1QY25 vis-à-vis  38.3% in SPLY.

Courtesy – AHL Research