Key Takeaways:
• Depressed margins due to low demand and competition
• Debt restructuring talks ongoing with debtors
Agha Steel Industries Limited reported loss per share of PKR 8.41 in FY24 against earnings per share of PKR 1.50 in FY23. Total revenue in FY24 reached PKR 13.7 Bn against PKR 20.6 Bn in FY23, a decrease of 33%. The company saw its gross margin plunge from 23% in FY23 to -5% in FY24.
During FY24 the company went through a fire at its premises which led to the rehabilitation of its rerolling mill. The re rolling mill was back up and running in 3 weeks. Prior to the incident the company was up to date on all its payment obligations however it is now in talks to restructure its debt with banks.
Haircuts are not expected in these negotiations. While the company had earlier indicated it would pursue the purchasing of local iron ore it has now placed this on the back burner until better demand conditions. Similarly, the MIDA project will not be operational until demand returns.
Currently the company faces a bleak outlook with finished product prices plummeting and the company having to operate at a loss. Despite this, the company has the lowest prices in the market in a bid to maintain market share. Management expects this situation to continue until economic growth of above 3.2% is achieved by the country and construction activity picks up again.
Important Disclosures
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