International Steels Earnings Fall 69% YoY

Staff Report: International Steels (ISL) announced its 4QFY24 results, reporting earnings of Rs597 million (EPS of Rs1.37), a 69% decline year-over-year (YoY). The earnings fell below expectations due to lower net revenue and gross margins.

The company declared a final cash dividend of Rs3.0 per share for 4QFY24, which aligned with industry expectations, bringing the total FY24 dividend to Rs5.5 per share.Steel Industry Demands Fair Approach to Turnover Tax

Net revenue for 4QFY24 decreased by 30% YoY and by 18% quarter-over-quarter (QoQ) to Rs13.3 billion. This decline was attributed to weaker local demand for flat steel, as reflected in Pakistan Bureau of Statistics data. Gross margins for 4QFY24 stood at 10.1%, compared to 11.7% in 3QFY24 and 23.6% in 4QFY23. The lower margins on a QoQ basis were driven by narrower HRC-CRC spreads, which averaged US$73/MT, compared to US$88/MT in the previous quarter.

Distribution expenses for 4QFY24 fell by 33% YoY and by 51% QoQ to Rs376 million, primarily due to lower sales volumes during the quarter.

For FY24, ISL’s earnings rose by 4% YoY to Rs3.65 billion, largely due to a significant reduction in other expenses, which amounted to Rs589 million, a 69% YoY decrease. In FY23, the company had recorded exchange losses of Rs1.48 billion. Gross margins for FY24 were 12.4%, down from 13.8% in FY23.

Distribution expenses surged by 110% YoY to Rs2.09 billion in FY24, driven by inflationary pressures and the implementation of the axle load regime. The company also reported a tax reversal of Rs254 million in 4QFY24, compared to a tax expense of Rs1,167 million in 4QFY23 and Rs139 million in 3QFY24.