Systems Limited Reports 24% Profit Decline over 9 Months

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.