Systems Limited (SYS) reported a mixed bag of results for the first quarter of calendar year 2024 (Q1CY24). While the company’s profit after tax (PAT) dropped significantly by 59% to Rs. 1.571 billion compared to Rs. 3.879 billion in the same period last year, revenue showed positive growth.
This decline in profits can be attributed to foreign exchange fluctuations. The company experienced exchange rate losses in Q1CY24, contrasting with substantial exchange gains in Q1CY23. However, there was a slight increase of 2% in earnings on a quarter-over-quarter basis. No dividends were declared for shareholders in Q1CY24.
On the positive side, SYS’s net sales reached Rs. 15.194 billion, reflecting a year-over-year growth of 42%. This growth was driven by strong performances in key sectors like technology-related solutions (32% YoY growth), Banking, Financial Services & Insurance (BFSI) (35% YoY growth), and telecommunication services (49% YoY growth).
Despite revenue growth, SYS’s gross margins dipped to 23.06% in Q1CY24 compared to 26.08% in Q1CY23. This decrease is likely due to factors like higher energy costs and inflationary adjustments during the quarter.
The company’s financial performance was further impacted by a shift from other income of Rs. 2.552 billion in the previous year to an expense of Rs. 57 million in Q1CY24. This change is a result of significant exchange rate losses compared to gains experienced earlier.
There were some positive developments on the cost side. Finance costs dropped by 6% YoY to Rs. 148 million in Q1CY24 due to a reduction in short-term borrowings. However, administrative and distribution expenses rose by 36% YoY due to inflationary pressures. Effective taxation also climbed to 11% in Q1CY24 compared to 3% in Q1CY23.
This mixed performance is reflected in SYS’s earnings per share (EPS), which fell to Rs. 5.39 for the quarter compared to Rs. 13.32 in the same period last year.
