Business

Systems Limited Reports 24% Profit Decline over 9 Months

Systems Limited reports 24% profit decline

Systems Limited (SYS) reported a consolidated profit after tax (PAT) of PKR 5,432 million (Earnings Per Share: PKR 18.6) for the nine months ending September 30, 2024 (9MCY24). This represents a decrease of 24% year over year, compared to PKR 7,146 million (EPS: PKR 24.5) in the same period last year (9MCY23).

However, consolidated earnings for 3QCY24 were Rs. 2,188 million (EPS: PKR 7.5), an increase of 18% year over year.

Net sales for 9MCY24 were Rs. 48.3 billion, an increase of 29 percent year over year. Additionally, topline sales increased across all segments in dollar terms, driving a 22% year-over-year increase to Rs. 17.2 billion in 3QCY24.

9MCY24 financial performance

Metric	9MCY24	Change
Gross Margins	25%	Down 430 bps YoY (290 bps in Q3)
Reasons for Decline	Inflation in compensation, rising energy costs, lower average exchange rate
Administrative Expenses	Increased	Up 15% YoY / 26% QoQ
Distribution Expenses	Increased	Up 15% YoY / 26% QoQ
Other Income	PKR 186 million	Up 4% YoY
Finance Costs	Declined	Down 60% YoY / 30% QoQ
Reason for Finance Cost Decline	Lower short-term borrowings

Summary

Gross Margins dropped to 25% due to inflation, rising energy costs, and currency issues.
Administrative and Distribution Expenses rose due to inflation and increased resources.
Other Income was PKR 186 million, thanks to interest from subsidiaries.
Finance Costs decreased significantly because of lower borrowings.

In 3QCY24, the effective taxation for the corporation was 9.9 percent, whereas in SPLY, it was 6.4%. As of this year, higher tax rates are applied in the UAE region, which led to this increase in taxes.