In 9MCY23, the company reported a profit of PKR 903.14 million (EPS: PKR 26.47), marking a 38% YoY decline from PKR 1.5 billion (EPS: PKR 43) in the same period last year. This decrease in profitability was primarily attributed to higher finance costs and exchange losses, which had a negative impact on the company’s bottom line.
During the same period, the company’s net revenue increased by 8% YoY to PKR 21 billion, while the cost of sales rose by 13% YoY to PKR 15.6 billion. Additionally, administrative expenses saw a significant increase, growing by 30% YoY and 34% QoQ. The company’s gross profit decreased by 3% YoY in 9MCY23 and 7% QoQ in 3QCY23.
One notable factor was the substantial increase in ARPL’s finance costs, rising by 143% YoY, although they declined by 28% QoQ during the review period. The higher interest rates and KIBOR rates contributed to this significant rise in finance costs.
Management pointed out that in 2022, the company successfully completed the global acquisition of Huntsman Textile Mills and the local acquisition of Archroma Chemicals Pakistan (Pvt) Limited. Currently, the company is working on merging the local acquisition into Archroma Pakistan Limited, pending a decision from the Sindh High Court.
The company’s business segments are divided into Textile Effects (88%) and Packaging & Paper Coating (12%). In the same period, sales for Textile Effects and Packaging & Paper Coating increased by 5% YoY and 46% YoY, respectively.
Management noted that local and export demand remained under pressure, leading to a 50% reduction in production during 9MCY23. Nevertheless, the company managed to increase sales by 8% YoY. Local sales saw a 10% YoY increase, while exports grew by only 1% YoY, primarily due to the impact of an earthquake in Turkey affecting the company’s exports.
The company is actively expanding its presence in the home care and construction industries, collaborating with market leaders to diversify its portfolio.
The production capacity of the company’s different plants includes Dyes/OBAs (12,000 tons), chemicals (24,280 tons), pigments (1,520 tons), and emulsions (52,220 tons), with a total capacity of 108,020 tons per annum.
Going forward, ARPL expects a decrease in finance costs for the next year. Management anticipates improved margins since the prices of the products are dollar-linked. The company’s localization efforts are considered a significant advantage, and the merger of Huntsman is expected to drive aggressive turnover growth in the coming year.
Important Disclosures
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