Service Industries Limited Finalizes Demerger, Posts Mid-Year Financials

Karachi: Service Industries Limited (SIL) has successfully completed a significant corporate restructuring with the demerger of key business units, as outlined in their latest financial disclosure for the half-year ended June 30, 2024. According to information available from the Pakistan Stock Exchange (PSX), this strategic move has led to the creation of separate entities under the SIL umbrella, enhancing operational focus and financial transparency.

The restructuring, approved by the Board and shareholders in early 2024 and sanctioned by the Lahore High Court on June 12, effectively segregated the Tyre and Retail Undertakings along with Speed (Private) Limited Shares into newly formed entities, namely Service Tyres (Private) Limited, Service Retail (Private) Limited, and Service Industries Capital (Private) Limited. This strategic realignment became effective as of January 1, 2024, with the Company’s latest financial statements reflecting the new structure, excluding the financials of the divested units.

For the period ending June 2024, SIL reported net sales of Rs. 2.74 billion. The operating profit stood impressively at Rs. 1.14 billion, with a profit before tax of Rs. 120.34 million. The net profit after tax was reported at Rs. 47.04 million, yielding an earnings per share of Rs. 1.00. These figures represent the financial outcomes of the continuing operations post-demerger, without comparative figures from the previous year due to the structural changes.

Subsidiaries of SIL, including Service Global Footwear Limited, have contributed positively to the parent company’s financial health, with dividends amounting to Rs. 491 million received during the half-year. Furthermore, an additional investment of Rs. 335 million was made in Service Long March Tyres (Private) Limited, aimed at expanding production capacity and boosting profitability.

Despite the challenging economic climate marked by policy shifts, rising power costs, and political uncertainties, SIL’s management remains optimistic about the efficiency gains from the demerger. The specialized management teams of the new entities are expected to drive operational efficiencies and shareholder value.

The directors expressed gratitude towards shareholders for their continued trust and acknowledged the efforts of employees, customers, suppliers, and bankers for their support in navigating these transformative times. SIL looks forward to leveraging these changes to deliver enhanced financial results in the forthcoming periods.

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