Karachi, August 19, 2022 (PPI-OT): ICI: Corporate briefing session key takeaways
ICI Pakistan Limited (ICI) announced its FY22 financial results wherein the company posted consolidated profit of Rs8,860mn (EPS: Rs91.66), up 52% YoY. The company also announced a dividend of Rs35.00/share alongside FY22 results. ICI held its corporate briefing today to discuss the annual results and outlook, we present key takeaways from the session.
ICI Pakistan Limited is planning to change its name to “Lucky Core Industries Limited” by Dec’22 subject to approvals. Moreover, the company is interested in acquiring 75% shareholding in Lotte Chemicals (LOTCHEM), which is the sole producer of PTA, the key raw material for the manufacturing of PSF. The company is also setting up a greenfield project of 1,000tpd float glass as part of JV with TGL.
The acquisition/investment will be largely financed via cash and debt. The management does not see any impact on the payout going forward due to these acquisitions/investments.
ICI is divesting its 26.5% stake NutriCo Morinaga at Rs9.7bn (US$45mn) resulting in a gain of Rs7.6bn. This divestment would help the company in financing its future growth projects. Morinaga is the second largest player in the infant milk category with 11% market share by volume.
In the soda ash business, the company is expanding its production capacity by 60k tons to 560k tons by FY23. The company’s export/domestic volumes of soda ash stand at 61/399 k tons during FY22. To protect the local industry, the government has recently imposed 20% RD on imports of soda Ash.
ICI is the second largest domestic player in the polyester segment with 21% market share. Favourable regional dynamics and higher cotton prices, along with significant Rupee devaluation has benefitted the polyester segment.
The imposition of sales tax on pharmaceuticals might reverse. If not, there are other measures like cost efficiencies, increased volumes and the launch of new products by which the company could operate optimally in the pharma segment.
In the animal health segment, ICI is focusing towards localization of manufacturing to improve margins. Due to its strong presence, the company’s brand umbrella achieved a topline of Rs3.7bn during the year.
Deteriorating macros, increased energy cost, higher financing cost and exchange rate along with the imposition of sales tax on pharma products with the inability to pass on cost pressure are some of the challenges that the management foresees.