FOR Treet Corporation, which is part of one of the oldest industrial groups in the country that is renowned for its shaving razors, the financial year 2013 saw higher administrative and distribution costs take a big bite from its profits.
As a result, the company’s after-tax profit dropped 29.4 per cent to Rs218.77 million, from Rs309.98 million in the prior year. That corresponds with earnings-per-share of Rs5.23, down from FY12’s eps of Rs7.41. Treet announced a final cash dividend of Rs2 per share, which translates into a 20 per cent annual dividend yield, according to the company’s filing with the Karachi Stock Exchange last week.
Meanwhile, the consolidated profit for the Treet Group of Companies took a hit of 49.5 per cent, as it dropped to Rs214.08 million in FY13 from Rs420.23 million in FY12.
The group also announced a total cash profit of Rs6.69 for each of its participation term certificates (TCLTC), and a total cash payment of Rs6.84 per TCLTC.
And while Treet Corporation recorded a 21 per cent growth in net sales — Rs3.4 billion in FY13, from Rs2.8 billion in FY12 — its cost of goods sold registered a 9.5 per cent increase to reach Rs2.3 billion, from Rs2.1 billion a year ago. This resulted in the gross profit rising to nearly Rs1.1 billion, from Rs715 million.
However, the company’s administrative expenses and distribution cost ballooned as well — by 50 per cent and a massive 290 per cent respectively — resulting in its operating profit to drop by 46.5 per cent to Rs241 million. Other operating expenses also went up from Rs1.8 million to Rs4.6 million during the period under review — an increase of 155 per cent.
In a detailed report that accompanied the company’s financial results for 9MFY13 (July 2012-March 2013), Treet had attributed its then-lower earnings to an increase in power tariff and in-house generation costs; rise in salaries for staff members, and a Rs35 million provision it had made for doubtful debts against its motorcycle operations, among others.
On the other hand, Treet also announced in its latest filing that it would allow TCLTC holders to redeem their certificates by converting them into company stock. Providing details of the conversion, a company notice read, “[a] holder of 1,000 TCLTC will get 70 ordinary shares of the company on or before November 2, 2013, vis-à-vis principal value of Rs4,140 foregone”.
Treet had issued these participation term certificates of seven-year tenor last October, and managed to raise around Rs1.254 billion through the offering. The company had said at the time that it would use this money to pay back its bank loans.
And that seems to have been the case, as Treet Corporation’s financial cost for FY13 almost halved to Rs122.86 million from Rs240.15 million in FY12. However, the company did record a separate entry, ‘Financial charges Treet-PTC’, for Rs279.81 million.
Company profile: The Treet Corporation Limited manufactures and markets shaving blades, razors and soaps, and it has also spread out into textiles, automobiles, autoparts, packaging, and labour services sectors. Its associated companies include the IGI Investment Bank and IGI Insurance. — Ali Raza Mehdi