- Systems Limited (SYS) announced its 1Q2024 result, in which it posted a consolidated PAT of Rs1.57bn (EPS of Rs5.39), down 60% YoY and up by 2% QoQ. The result was lower than industry expectations.
- Overall, on a YoY basis, earnings were down by 60%, mainly due to the absence of exchange gain in 1Q2024, compared to the last quarter, when the company reported a hefty exchange gain of Rs2.4bn (reflected in the other income account).
- Lower than expected result was due to lower than expected sales and gross margins.
- Revenue for 1Q2024 decreased by 6% QoQ, however, it increased by 42% YoY to Rs15.2bn. QoQ decline in revenue is due to timing difference in revenue recognition from some projects which will be reflected in coming quarters, as per channel checks. Also one-off trading revenue was recorded in 4Q2023 which is absent in 1Q2024.
- Gross margins for 1Q2024 clocked in at 23% vs 26% in 1Q2023 and 22% in 4Q2023. Lower gross margins on a YoY basis are due to wage inflation adjustment outpacing revenue growth.
- Distribution costs increased by 25% YoY and by 54% on a QoQ basis to Rs433mn. While admin costs increased by 41% YoY and 10% QoQ to Rs1.1bn.
- Loss from Associate stood at Rs21mn which is down by 81% YoY.
- Sales from biggest geographical segment of SYS, Middle East, declined by 14% QoQ but increased by 72% YoY to Rs8.7bn. Among other major segments, North America increased by 6% QoQ and 20% YoY to Rs3.3bn, Pakistan increased by 7% QoQ but declined by 13% YoY to Rs2.05bn.
- The revenue share from North America, Europe, the Middle East, Pakistan, and Asia Pacific in 1Q2024 stood at 22%, 4%, 57%, 14%, and 3%, respectively, compared to 27%, 12%, 40%, 20%, and 2% in 1Q2023.
Courtesy – Topline Pakistan Research
