Ittehad Chemicals Limited reported earnings per share of PKR 13.86 in FY24 against earnings per share of PKR 18.26 in FY23 a decrease of 24%.
Total revenue in FY24 reached PKR 24.3 Bn remaining stagnant compared to FY23 with PKR 24.3 Bn. The company saw its gross margin decrease from 21% in FY23 to 20% in FY24. In this fiscal year the company has seen its margin further deteriorate to 17% in 3QFY25. This was due to the increase in energy costs. However, net revenue in 1QFY25 was PKR 7.2 Bn, up 26% from PKR 5.7 Bn in 1QFY24.
As a result, earnings per share rose 11% from PKR 2.83 in 1QFY24 to PKR 3.13 in 1QFY25. The management apprised that as a result of the imposition of levy on gas captive power plants it has moved its energy consumption to primarily LESCO for cost savings. Gas fired captive plant is now used only during peak hours.
The company is also in the process of adding a biomass fueled power plant of 37.2MW in addition to its 35 MW gas plant. It is expected that this new biomass plant will cater completely to the company’s current energy needs. The per unit cost of energy from the biomass plant is expected to be about 15-20% lower.
The biomass plant is expected to be commissioned in 18 months with construction having started in February 2025. ICL is also in the process of setting up a new and more efficient caustic flakes plant for export purposes. This plant is expected to come online by April 2026. Management estimated that its margin in the caustic soda segment is between 18% to 20% on average while the LABSA segment is between 8% and 10%.
In response to questions about change in duty structure and the viability of imports the management clarified that imports of caustic soda are not viable as the handling and storage of the liquid would require enhanced port infrastructure. The local price of caustic soda is currently PKR 155,000 per ton.
Going forward, the management was hopeful of growth in demand for its products as the economy begins rebounding especially in the personal care and detergent downstream sectors.
Important Disclosures
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