Qudsia Bano

The revenue of Arif Habib Limited increased 21% to Rs831 million in the first six months of the ongoing fiscal year 2022-23 from Rs685 million over the same period of last year, indicating the company's top-line growth was healthy. However, the company's gross profit decreased 53% to Rs562 million from Rs1.2 billion in the same period of last year, indicating that the company's profitability was severely impacted. The decline in gross profit is primarily attributable to an increase in the cost of goods sold (COGS) or a decrease in the selling price of goods. The decline in gross profit margin can have several adverse implications for the company's financial performance, including lower operating margins and reduced cash flow.

Furthermore, Arif Habib Limited's profit-before-tax decreased by a staggering 92% to Rs68 million in 6MFY23 from Rs850 million in 6MFY22. This decline was a result of the decrease in gross profit, along with the increase in operating expenses. The company ended up with a net loss of Rs33 million in 6MFY23 compared to a net profit of Rs758 million in 6MFY22, which represents a decline of 104%. The decrease in net profit is primarily due to the decrease in gross profit and the increase in operating expenses, which resulted in lower profitability for the company. To improve its financial performance, Arif Habib Limited needs to focus on its COGS and operating expenses, as well as finding new revenue streams to boost its top-line growth.

Performance in 2021-22

Arif Habib Limited's summary for the fiscal year 2021-22 indicates a decline in the company's financial performance compared to the previous fiscal year. Arif Habib Limited’s total revenue decreased by 27% to Rs1.1 billion from Rs1.5 billion in the previous year, indicating that the company experienced challenges in maintaining or growing its top line. Despite the decline in revenue, the company's operating income increased by 24% to Rs88 million from Rs70 million in the previous year.

However, the company's profit-before-tax decreased by a significant 59% to Rs970 million from Rs2.3 billion in the previous year, while the net profit decreased by 60% to Rs826 million from Rs2 billion. This decline in profitability suggests that the company was unable to offset the decline in revenue with cost savings or other measures to maintain its profitability. The company's earnings per share (EPS) also decreased by 60% to Rs12.65 from Rs31.89 in the previous year.

About the company

Arif Habib is a public listed company incorporated in Pakistan under the now defunct Companies Ordinance, 1984, which has since been replaced with Companies Act, 2017. The company was initially incorporated as an unquoted public limited company wholly owned by Arif Habib Corporation Limited. The principal activities of the company are investments, share brokerage, inter-bank brokerage, Initial Public Offer (IPO) underwriting, advisory and consultancy services.

Credit : Independent News Pakistan-WealthPk