Service Global Footwear Limited (SGF) announced its financial result for CY23 today, posting a PAT of PKR 1,182mn (EPS: PKR 5.75), up by 3.5x YoY. During 4QCY23 the profitability of the company was recorded at PKR 390mn (EPS: PKR 1.91) compared to a loss of PKR 284mn (LPS: PKR 1.39) in 4QCY22. Alongside the result, the company announced a final cash dividend of PKR 2/share.

Result Highlights

• Topline during CY23 clocked in at PKR 15,062mn, displaying a jump of 28% YoY in contrast to PKR 11,753mn in SPLY, amid PKR depreciation and an increase in exports. During 4QCY23, sales declined by 3% YoY | 31% QoQ, due to suppressed demand post-holiday season.

• During CY23 gross margin arrived at 21.9%, up from 18.6% during SPLY mainly due to an increase in shoe prices which were more than enough to offset the impact of the increase in raw material costs. Gross margins also increased by 1050bps during 4QCY23 to 21.3%, due to the aforementioned reason.

• Administrative expense rose by 40% YoY settling at 198mn during 4QCY23, attributed to increase in employees’ wages and salaries.

• Other income declined by 9% YoY to clock in at PKR 190mn in 4QCY23, on the back of lower interest earned on diminishing long-term loan to the parent company.

• The share of profit from associates, amounting to PKR 474mn, represents the stake-adjusted (18.9%) profit after tax of Service Long March (SLM)

• The effective tax rate was set at 6.4% during 4QCY23. With this, the effective tax for CY23 stood at 25.9% (CY22: 50.3%).

Courtesy – AHL Research