Karachi, April 22, 2022 (PPI-OT): ASTL: Corporate briefing session key takeaways

Amreli Steels Limited (ASTL) announced its third quarter financial result wherein the company posted a profit of Rs531mn (EPS: Rs1.79), +6%/-12% YoY/QoQ. The company held its corporate briefing yesterday to discuss the quarter’s results and outlook.

Scrap costs for the quarter averaged at US$553/ton. The management shared that it holds 30k tons in finished goods. Scrap costs for 9MFY22 averaged at US$538/ton whereas for 9MFY21 it was around US$350/ton.

January and February were slower in terms of volumetric sales but a pickup in demand was seen in March. The company shared that rebar sales volume clocked in at 98.4k tons for the quarter, a 3% QoQ increase.

Management shared that 70-75% of the required scrap is imported from European Union, 50% of which is from UK; whereas the rest is imported from USA, Australia, Middle east and Russia. Scrap mix for the company consists of 10-15% HMS and 70-80% shredded.

Average electricity tariff for the company for March quarter was Rs20/kWh, whereas the rate for last quarter was Rs18/kWh.

ASTL has increased its share in the Southern market of late. The company is operating at a 67% capacity utilization.

The company has revised downward its volumetric sales target for the year. While ASTL was initially expecting ~425k tons, it now expects the year to close around 375-380k tons. Management foresees annual sales growth for FY23 c. 10% YoY whereas the rest of the industry is likely to grow by 5% YoY.

The management apprised that an expansion plan for rolling capacity of 120k tons was impacted by the pandemic and the geo-political situation. The company now intends to go for expansion in 1-1.5 years’ time as it believes that FY24 will likely be slower in terms of demand being the year after elections, however demand is expected to pick up pace from FY25 onwards.