Karachi, September 30, 2022 (PPI-OT): ISL: FY22 Analyst Briefing Takeaways

International Steels Limited (ISL) organized its analyst briefing today to apprise investors of the FY22 result and future outlook. To recall, ISL announced the FY22 result where the company posted PAT of PkR5.4bn (EPS: PkR12.44), down 27.5%YoY. ISL posted PAT of PkR57mn (EPS: PkR0.13), down 98%YoY in 4QFY22. The company also announced a final cash dividend of PkR6.5/share in FY22:

Revenue increased by 11.0%YoY/31%YoY in 4QFY22/FY22, mainly reflecting higher steel prices which offset the decline in offtakes (14%YoY) to 424K tons. Galvanized sales clocked in at 240K tons (-18.1%YoY) and Colled Roll Coil (CRC) sales clocked in at 184K tons (-7.5%YoY) in FY22. Local and export sales showed impressive growth of 31%YoY and 57%YoY in FY22, respectively. Moreover, the major export markets of the company during FY22 were North America, GCC, Asia, and the EU.

Local industry volumes of flat steel decreased by 15.4%YoY to 1.1mn tons in FY22, comprising of 535K tons of CRC and 564K tons of both galvanized and coated steel.

Management believes ISL is likely to be the biggest supplier to the pipe steel manufacturers which have an approximate market size of 200K tons in FY23.

Finance costs increased by a whopping 63%YoY in FY22 as a result of the policy rate increasing from 7% to 15% which impacted the bottom line.

During FY22, the CRC debottlenecking project with a total CAPEX of PkR1.23bn has successfully commissioned and the new capacity currently stands at 400K tons vs 230K tons previously. Modified skin passing capacity has also been increased to 350K tons from 230K tons. Furthermore, C and Z purlins have successfully been commissioned at the service center and have started commercial production.

Going forward, completion of debottlenecking in CRC finishing capacity has enabled the company to cater to larger domestic demand for white goods, as well as additional demand coming from pipe manufacturers. Furthermore, additional CRC capacity will also help ISL to increase CRC’s contribution to the export sales mix from 20% to around 40-50% in the coming years. Hence, management also foresees robust growth in exports (total export sales: PkR18.7bn (+57%YoY) in FY22) to continue in FY23 where ISL is expected to export to major countries across the globe.