Corporate Briefing Notes
Ittehad Chemicals Limted (ICL) held its corporate briefing session to discuss the financial results for 9MFY23 and its future roadmap.
● To recall, the Company achieved a substantial growth of 69% YoY in net sales during 9MFY23, reaching at PKR18bn compared PKR11bn in the previous year. Similarly, notable improvement also witnessed in the gross profit margin, increasing from 13% to 20% compared to the SPLY. This improvement is primarily attributed to the increased exports of the Company’s products in the international market.
● Moreover, the bottom line reflected a significant net profit after tax of PKR1.3bn (EPS: PKR13.22/sh) in 9MFY23, compared to PKR374mn (EPS: PKR3.74/sh) in SPLY.
● Production of caustic soda down by 7% YoY to 70K MT during the noted period vs 75K MT in SPLY. The decline in production is due to less demand from textile sector.
● On the other hand, production of LABSA increased by 29% YoY in 9MFY23, reaching at 20K MT as against 15K MT during the corresponding period. The significant increase in production played a key role in driving sales growth for the company.
● The company successfully achieved the CoD of LABSA/SLES Phase-2 in 2022 that has substantially increased the segment’s total capacity from 24K MT to 70K MT, respectively.
● LABSA prices hovers at USD1650/MT, while LAB prices are trading at USD1850/MT. To note, LABSA prices have come down from USD2850/MT since Oct’22.
● Current domestic price of Caustic soda is PKR140K/MT.
● To enhance fuel and operational efficiency, ICL is currently working on upgrading their power plant engines, despite initial delays caused by LC issues.
● During the period, the capacity utilization of calcium chloride remained at approximately 80-85%. The management highlighted that the prices of calcium chloride experienced a decline to PKR37-40K from June 2022. However, there has been a gradual recovery in prices, and they are expected to continue their upward trajectory. Calcium chloride is primarily exported to Middle Eastern countries for oil exploration purposes. The average export price of Calcium chloride during the period clocked in at PKR70K/MT.
● The company’s current average electricity tariff stands at PKR28/unit. However, the management is actively exploring strategies to mitigate the impact once the company is subjected to the regular price of PKR37 per unit. They are assessing potential avenues to effectively pass on the cost impact resulting from the increased electricity tariff.
● Going-forward, the Company foresees continued pressures on its bottom-line due to elevated energy costs, freight costs, PKR devaluation, and rising interest rates. To mitigate these challenges, the Company is exploring additional export opportunities in Central Asia within the Calcium chloride segment, aiming to improve profitability through market diversification.
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