Key Takeaways:
• There is decrease in margins due to working capital issues and dampened demand
• The company is looking forward for their reprofiling.
• The company is currently operating at 28% of their capacity
Amreli Steels limited reported loss per share of PKR 20.56 in FY24 against a profit per share of PKR 2.35 in FY23. Furthermore, in 1QFY25 the company reported loss per share of PKR 3.34 against PKR 0.58 in SPLY. Margins declined from Q3 to Q4, primarily due to working capital constraints, reduced demand, and increased price competition.
The increase in the net loss margin was driven by higher finance costs and deferred tax liabilities. The company’s retention was primarily concentrated in Sindh, which was significantly impacted by flooding, while the remainder of its production was directed towards export markets.
The company is operating at only 28% of its capacity, due to high fixed costs there margins remain impacted. In response to these challenges, the company is actively exploring restructuring options and is currently engaged in discussions with banks to explore potential reprofiling of its financial obligations.
Scrap prices have remained low, influenced by a slowdown in the construction sector. Looking ahead, the company expects demand to grow to between 180,000 and 200,000 tons from the second quarter of FY26
Important Disclosures
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