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Ittefaq Iron Industries Limited (IFIL) announced its financial performance for the first quarter (July-September) of the ongoing fiscal year 2023-24, registering a net loss of Rs29.95 million compared to profit of Rs20.06 million in 1QFY23, posting a massive negative growth of 249.3%, reports WealthPK. During 1QFY24, the net sales came in at Rs758.9 million, 67.9% lower than Rs2.36 billion over the same period last year. Hence, the net profit margin fell to -3.95% in 1QFY24 from 0.85% in 1QFY23. Similarly, the company's gross profit plunged by 66.07%, clocking in at Rs29.37 million in 1QFY24 compared to Rs86.56 million in 1QFY23. However, the gross margin improved faintly to 3.87% in 1QFY24 from 3.66% in the same period last year.

Meanwhile, the administrative and general expenses increased to Rs34.23 million in 1QFY24 from Rs28.9 million in 1QFY23, showcasing a hike of 18.26%. However, the company observed a substantial decline of 97.13% in other operating income, which plunged to Rs146,973 from Rs5.12 million in the same quarter last year. During the first quarter of FY24, the iron manufacturing company sustained a massive loss-before-tax of Rs46.69 million, a significant decline of over 273.26% compared to the pre-tax profit of Rs26.95 million in the same period the previous year. The company registered a loss per share of Rs0.21 in 1QFY24 against earnings per share of Rs0.14 in 1QFY23.

Historical trend

Ittefaq Iron Industries Limited's net sales steadily rose from 2020, peaking at Rs11.22 billion in FY22, but then fell to Rs8.28 billion in FY23. Over these four years, the net profit fluctuated, reaching a peak of Rs266.7 million in FY21, and dropping moderately to Rs234.05 million in FY22. However, in FY20 and FY23, the company bore a net loss of Rs212.8 million and Rs93.78 million, respectively. This indicates the company was unable to control expenses to produce a respectably higher profit in FY23. In 2021, the iron manufacturing company registered the highest gross profit margin of 10.42%. However, it fell to 4.53% in 2022 and 1.72% in 2023. The net profit margin followed a similar trend, standing at -6.29% in 2020 and -1.14% in 2023. The net profit margin remained positive at 4.3% in 2021 and 2.09% in 2022. The company recorded the highest earnings per share of 1.85% in 2021 and the highest loss per share of -1.47% in 2020.

Assets and liabilities analysis

Ittefaq Iron Industries Limited posted a decline of 3.13% and 1.23%, respectively, in current and non-current assets on September 30, 2023, compared to June 30, 2023. As a result, the company's total assets declined 2.62% to Rs5.15 billion in September 2023 from Rs5.32 billion in June 2023. At the end of September 2023, the company's share capital and reserves stood at Rs4.54 billion against Rs4.57 billion in June 2023, representing a slight decline of 0.66%. On the liability side, the company effectively managed to reduce its non-current liabilities by 4.64% to Rs457.7 million in September 2023 from Rs480.06 million in June 2023. Similarly, current liabilities also fell 6.22% in September 2023.

Credit: INP-WealthPk