Ittehad Chemicals Limited (ICL) reported consolidated earnings per share of PKR 12.90 for FY25, compared to earnings per share of PKR 13.85 in FY24. Furthermore, in 3QFY26, the company reported earnings per share of PKR 2.77, compared to earnings per share of PKR 3.05 in the same period last year (SPLY). Management noted that recent quarters witnessed some pressure due to rising raw material and energy costs.
The increase in LABSA raw material costs was passed on in full to customers. Management also confirmed that depressed gross margins in the last quarter were partially due to SNGPL arrears, which it considers a one off item, while the matter remains under litigation.
The biomass power plant is designed to achieve complete energy self sufficiency by utilizing agricultural residues. The project cost is estimated at approximately PKR 10bn and will be financed through a 70:30 debt-to-equity structure. Commissioning of plant is expected in FY27. ICL is also installing a new flaker plant to enhance capacity by 16,500 metric tons per annum. The project is expected to be commissioned by September 2026 and is aimed at increasing the company’s share in both local and export markets. ICL has invested in fuel efficiency improvements for its gas fired power plant, resulting in a 9% improvement in efficiency.
The company exports to the Middle East, Central Asia, Europe and Australia, and has recently started exporting to the USA. The average power requirement for the chlor-alkali and caustic soda operations stands at around 30–32MW. Currently, the mix between gas and other energy sources is adjusted based on relative pricing. The reduction in super tax from 10% to 8% is expected to have a positive impact on the company.
However, there were no changes in the duty structure for caustic soda or LABSA. ICL Power was created as a separate subsidiary to take advantage of tax exemptions available for biomass energy projects. Exports currently represent around 5% of revenue. Management aims to increase this share to 7–10% following the completion of the flaker expansion.
Important Disclosures
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