Millat Tractors targets to sell 26,000-30,000 tractors in FY24, up from FY23.

Millat Tractors (MTL) conducted its corporate briefing session today, where the management discussed the company’s financial performance and future outlook.

  • MTL sold 18,622 tractors in FY23 and is targeting to sell 26,000-30,000 tractors in FY24.
  • Management highlighted that the 47% YoY decline in volumetric sales in FY23 is 18.6k units from 35k units in FY22, which was attributed to the catastrophe caused by the floods in Pakistan.
  • MTL produces four models of tractors with various Horse Power (HP) engines, namely, 50/60/75/85. Among them, the most popular and the highest in demand is the 2WD 85HP.
  • MTL’s market share is around 60%, and the rest, 40%, belongs to Al-Ghazi Tractors (AGTL).
  • Export markets are mainly African countries and Afghanistan, where the company manages sales through established local (African) partners/dealers.
  • Local/export sales mix is around 93%/7%, respectively.
  • Besides tractors, MTL also have an Industrial Product Division, which deals with power-generating sets, forklift trucks, electropack engines and Prime movers. The contribution in total revenue from this segment is around Rs534mn (1.2% of total revenue) in FY23.
  • MTL has achieved a localisation level of 92%. However, the raw material required to produce the local parts is imported. Therefore, the input raw material is still exposed to currency fluctuations.
  • The company increased its inventory levels just before the year-end of FY23 as there was widespread news of import restrictions to control the current account deficit by the finance ministry. In this way, MTL managed to avoid production loss and operations went smoothly.
  • The company’s short-term borrowings increased due to the rise in working capital requirements and delays in sales tax refunds from the government.
  • The company reiterated its stance on the news circulating about Rs12bn excess refund of GST by FBR in media, where the management completely ruled out the authenticity of the fact and figure.
  • MTL received dividend of Rs285.9mn (Rs1.49/share) from all of its subsidiaries in FY23.
  • MTL also has 15.86% holdings in Hyundai Nishat Motors (HNM), where the company initially invested Rs3.1bn, which is currently valued at Rs6.1bn. HNM has not paid any dividends yet.

Courtesy – Topline Pakistan Research 

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