Karachi: Mughal Iron and Steel Ltd. (MUGHAL) and Amreli Steels Limited (ASTL), two prominent players in the rebar industry, are set to face subdued earnings for the fourth quarter of fiscal year 2024. This outlook aligns with a broader sectoral deceleration in the construction field, although both companies might see a slight improvement in sales volumes over the previous quarter.

According to JS Global, Mughal Iron and Steel projects a significant decline in earnings per share (EPS) to Rs1.2, down 51% compared to the same period last year. Despite expected volume increases in the ferrous division, heightened electricity costs are anticipated to compress gross margins by 6 percentage points year-over-year, settling at 10%. Meanwhile, Amreli Steels is predicted to continue its streak of losses, with an anticipated loss per share (LPS) of Rs1.5, an improvement from last year’s LPS of Rs3.3.

The financial trajectory of MUGHAL reflects a broader struggle within the industry, marked by an annual decrease of 48% in profit after tax and a nearly 51% reduction in EPS. Amreli Steels similarly displays a challenging financial performance with a substantial year-over-year reduction in gross profit of 35% and continued losses. Both companies are grappling with increasing operational costs and a dim demand outlook, further exacerbated by potential risks from the illegal import of steel products.

As the fiscal year nears its close, the sector remains under pressure due to rising electricity tariffs and a lackluster demand environment, which are expected to continue affecting the profitability of steel manufacturers in the foreseeable future.