Islamabad: International Steels Limited (ISL) reported a 57% year-on-year decline in its fiscal year 2025 earnings, posting a profit of Rs1,559 million (earnings per share of Rs3.58). Despite this substantial drop, the company's fourth-quarter performance exceeded market forecasts.

ISL's fourth-quarter earnings reached Rs608 million (Rs1.4 per share), marking a 2% yearly increase and a significant 46% jump compared to the previous quarter. The positive surprise stemmed from higher-than-anticipated gross margins of 10.68% in 4QFY25, a notable improvement from the 7.78% recorded in the first nine months of the fiscal year. This improvement is attributed to the company's shift towards renewable energy sources, specifically the commissioning of a 6.4MW solar power plant announced in May 2025.

Despite the strong fourth quarter, full-year gross margins settled at 8.6%, down from 12.4% in FY24. Net revenue in 4QFY25 saw a 25% year-on-year and 20% quarter-on-quarter surge, reaching Rs16.6 billion, driven by increased domestic flat steel sales. However, FY25 net sales experienced a 10% yearly decrease to Rs62,311 million, primarily due to lower international cold-rolled coil (CRC) steel prices, which averaged US$555/ton compared to US$630/ton in FY24.

Finance costs in the fourth quarter declined by 52% year-on-year, thanks to reduced interest rates. For the full year, finance costs dipped by 6% to Rs806 million. The effective tax rate for 4QFY25 came in at 35%, lower than the previous quarter's 39%. ISL also declared a cash dividend of Rs2.5 per share, surpassing market projections. The company is currently trading at price-to-earnings ratios of 8.2x and 6.5x for FY26 and FY27, respectively, with corresponding dividend yields of 8% and 10%.