Karachi, Ghani Glass Limited (GHGL) recently conducted a corporate briefing to discuss its financial results for the fiscal year 2023 (FY23) and the first quarter of fiscal year 2024 (1QFY24). The company reported significant year-over-year (YoY) growth in earnings per share (EPS) for both periods, alongside a dividend announcement. Key highlights and future outlooks were presented during the session, shedding light on the company's performance and strategic direction amid market fluctuations.
According to JS Research, GHGL's earnings showed a 34% increase in FY23, attributed mainly to price hikes in both domestic and export markets and an 8% increase in sales volume. Despite stagnant domestic demand due to a slowdown in construction activity and inflationary pressures, GHGL maintained its market leadership in several segments, including pharmaceutical bottles, food and beverage containers, and float glass. The closure of a competitor's plants also contributed to GHGL's market share gain and sales volume increase. However, increased costs, such as higher gas tariffs and input prices, led to a decline in gross margins to 27.7% in FY23.
In the first quarter of FY24, GHGL reported a 21% increase in earnings, though gross margins declined compared to the previous year. The sector's limited ability to pass on cost hikes was evident, as seen in the downward trend of net earnings and gross margins on a quarter-over-quarter basis. The company also experienced an increase in its effective tax rate to 15% in 1QFY24, compared to 5% in the same period last year.
Looking ahead, GHGL plans to mitigate the impact of weak domestic demand by increasing its export volumes. The company aims to expand its export from 70,000 tons in FY23 to 110,000-120,000 tons in FY24. Price increases for glass products are expected to counteract the effects of the Pakistani rupee's depreciation and anticipated rises in energy costs. Additionally, the company disclosed plans to temporarily shut down its Karachi-based pharmaceutical bottles plant for maintenance starting from December 2023 or January 2024.
GHGL's management is also awaiting clarity on the weighted average cost of gas for its float glass plant in Sheikupura, which currently faces significantly higher rates than its other plants in Karachi and Hattar.
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