KARACHI: Nishat Mills Ltd (NML) posted a consolidated profit of Rs3.78 billion for the six months ending on Dec 31, 2016, down 5.5 per cent from a year ago.

Sales for July-Dec increased 3pc year-on-year to Rs36.27bn. Analysts attributed it to the lower-than-expected contribution from the textile segment.

For Oct-Dec, NML reported earnings of Rs1.81bn, down 21pc year-on-year. On the core business front, NML revenues grew 7pc in the second quarter of 2016-17 to Rs19.2bn, which was below expectations as analysts anticipated a greater pick-up in textile sales.

Gross margins for the textile segment dropped two percentage points year-on-year for Oct-Dec to reach 11pc, depicting higher input cost as cotton price remained under pressure in the local market.

Topline Securities Analyst Salman Rashid stated that a further decline in gross profit margins and higher distribution cost dented the operating profit, which decreased 32pc year-on-year.

NML’s stock notice also stated that it will incorporate a wholly owned subsidiary with an initial investment of Rs100 million for setting up a project to assemble passenger cars and one-tonne light commercial vehicles (LCVs). The subsidiary is authorised to negotiate and enter into agreements with joint-venture partners/other parties along with being able to dilute/divest the investment in favour of the partner/other parties. NML also authorised an equity investment of up to Rs1.2bn in MCB Bank.

Published in Dawn, February 21st, 2017