Karachi: Archroma Pakistan Limited has reported a 9% decline in net sales for the nine months ending June 30, 2024, amidst a challenging global environment, according to the company’s latest financial report. The sales fell to PKR 19,060 million from PKR 21,036 million compared to the same period last year.
The company has faced significant pressures from high energy and commodity prices, exacerbated by ongoing conflicts in the Middle East and the Russia-Ukraine situation. This environment has affected consumer sales and demand across Archroma's primary markets, particularly in the textiles and construction industries. The company noted that these factors contributed to less than 50% production capacity utilization in its textiles sector.
According to information available from the Pakistan Stock Exchange (PSX), the board changes included the appointment of Mr. Victor Garcia, filling a vacancy created by the resignation of Mr. Thomas Bucher. The board now comprises five male and two female members, including two executive directors, two non-executive directors, and three independent directors.
Archroma’s financial position has been further impacted by increased costs of imported raw materials and higher operating expenses, which have significantly pressured gross margins across all business segments. This led to a net loss after taxation of PKR 308 million, a stark contrast to the PKR 903 million profit recorded in the previous year.
In strategic moves to strengthen its market position, Archroma Pakistan has integrated the operations of the newly acquired Huntsman Textile Effects Pakistan, now renamed Archroma Chemicals Pakistan (Private) Limited, into its operations. This merger, effective from October 1, 2023, followed the approval by the Board of Directors and the sanction by the Honorable High Court of Sindh. As part of the merger, 445,460 shares were issued based on a swap ratio of approximately 0.0455 of the company’s shares for every one share of the former Huntsman entity.
Looking ahead, Archroma Pakistan anticipates continued challenges due to volatile global energy prices and complex raw material supply chain issues. However, the management remains optimistic about the future, citing ongoing financing negotiations with the International Monetary Fund (IMF) and potential fiscal measures that could stabilize the economic landscape. These efforts are expected to support the textiles and construction sectors in Pakistan.
With stringent measures in place to control networking capital and a strong pipeline of projects aimed at increasing market share, Archroma Pakistan is poised to return to profitable growth in the foreseeable future, buoyed by strategic expansions and business developments following its recent acquisitions.