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Panther Tyres Limited posted moderate growth in revenue, but its net profit dropped during the financial year ending on June 30, 2023, compared to the previous fiscal. The company’s sales pushed higher by 4.8% to Rs21.4 billion in FY23 from Rs20.4 billion in FY22, WealthPK reports. The gross profit, which is the revenue left after accounting for the costs of goods sold, jumped a healthy 36.3% to Rs3.1 billion in FY23 from Rs2.2 billion in FY22, signifying the company’s efforts to manage costs.

Even though the company’s revenue and gross profit exhibited a positive growth, the net profit descended by 5.4% to Rs432 million in FY23 from Rs457 in FY22, indicating the increase in the company’s operational and administrative costs. The change in policy rate and enhanced taxes added to a fall in net profit.

Panther Tyres’ gross profit of Rs3.1 billion on net sales of Rs21.4 billion in FY23 resulted in a 14.50% gross profit ratio compared to 11.15% in FY22. The company’s net profit ratio was 2.02% in FY23 compared to 2.24% in FY22. The earnings per share (EPS), which is the return earned by the shareholders on each outstanding share of the common stock, decreased in FY23 to Rs2.58 from Rs2.72 in FY22, indicating a dip in the profitability of the company.

Assets analysis

A company’s non-current assets are those that cannot be easily liquidated, such as property, intangible assets and long-term investments. Panther Tyres reported growth of 16.26% in its non-current assets during the fiscal year ending on June 30, 2023, compared to FY22. 

During FY23, the non-current assets stood at Rs9.7 billion compared to Rs8.3 billion in FY22. This rise in non-current assets indicates that during FY23, the company invested in buying and expanding its long-term assets, which contributes to an enhanced production capacity and operations of the company. Contrary to this, the current assets are easily liquidated, such as cash, account receivables and inventory.

Panther Tyres’ current assets fell by 20.14% to Rs8.2 billion in FY23 from Rs10.2 billion in FY22. This can be the result of decrease in cash or increase in liabilities. Similarly, Panther Tyres’ total assets decreased 4.51% to Rs17.9 billion in FY23 from Rs18.7 billion in FY22. The fall in total assets indicates that the rise in non-current assets was not enough to offset the fall in current assets.

Equity and liabilities analysis

During FY23, the non-current liabilities of the company witnessed a moderate growth of 3.67% compared to FY22. The non-current liabilities include long-term borrowings, bonds and obligations of a company. In FY23, Panther Tyres’ non-current liabilities stood at Rs3.06 billion against Rs2.95 billion in FY22. This minute growth shows that the company took additional long-term liabilities or debt to finance its operations during FY23. In contrast, the current liabilities decreased by 12.83% to Rs8.23 billion in FY23 compared to Rs9.45 billion in FY22.

Current liabilities of a company are due within a year, such as short-term borrowing and other liabilities. The decline in the current liabilities of Panther Tyres shows it has successfully paid its short-term obligations because of better financial management and liquidity position. The total equity and liabilities are the sum of non-current and current liabilities. During FY23, the company’s total equity and liabilities were reduced by 4.51% to Rs17.9 billion from Rs18.7 billion in FY22.

Company profile

Panther Tyres Limited, established in Pakistan in 1983, is one of the top producers and suppliers of vehicle tyres, tubes, lubricants and spare parts. The company is the leading supplier of motorcycle tyres in Pakistan for both the original equipment manufacturers and replacement markets.

Credit: INP-WealthPk