Karachi: International Industries Limited (INIL) reported a 35% decline in profit for the fiscal year 2024, posting earnings of PkR1.5 billion (EPS: PkR11.17) compared to PkR2.3 billion (EPS: PkR17.23) in the same period last year. The decrease is attributed to lower volumes amid weak economic activity.
According to AKD Securities Limited, the company faced a 170% increase in gas tariffs for electricity generation, along with high interest rates, high inflation, and misuse of sales tax exemptions in the FATA/PATA region, all affecting demand and margins. Export demand was negatively impacted by a slowdown in the global economy, rising inflation, and higher interest rates in the US and other markets, affecting the building and construction sectors.
China's economic slowdown led to a downturn in its construction sector, causing price volatility in the steel market. INIL's energy cost per ton increased to PkR7,065 in FY24 from PkR4,679 in FY23, and domestic freight prices rose to PkR6,936 per ton from PkR5,303 per ton.
The company adjusted its working capital management and capital structure, reducing the total debt-to-equity ratio to 0.72x from 1.15x in FY23 to enhance profitability and margins. Domestic steel sales were PkR19.8 billion in FY24 compared to PkR18.7 billion in the same period last year, while polymer sales increased to PkR4.5 billion from PkR3.5 billion.
Export sales declined by 5% year-on-year, amounting to PkR4.8 billion in FY24 versus PkR5.0 billion in FY23, primarily due to a loss of exports to the Afghanistan and Sri Lanka markets. A slowdown in the four-wheeler segment led to subdued demand in the auto sector.
Looking ahead, management expects demand to remain weak in the first half of the year but sees potential for a rebound in the second half with a decline in financing rates. Export margins are lower than those for the domestic market.
The company is dealing with issues related to counterfeit products in the market, affecting sales volumes. INIL has launched a new business trading division, collaborating with international partners to introduce their products to Pakistan, with plans to commence in the next quarter.
The stock is not in AKD Securities' formal coverage.