Profits up for Archroma despite challenges
Textiles chemicals group Archroma has published its report for the first quarter ending on December 31, 2024.
The report indicated that demand and consumer sales in the textiles and construction industries remained slow for both local and export markets.
This slowdown was primarily due to higher energy and commodity prices and ongoing conflicts in Russia-Ukraine and the Middle East.
Despite these challenging conditions and low production capacity utilisation in the textiles industry, the company achieved net sales of $25.87 million (Pakistani rupees 7.217 billion) during the first quarter, compared with $25.93 million in the same period last year.
Positive contributions from various savings and efficiency improvement programmes launched at the end of the previous year, along with changes to the sales product mix, helped improve gross margins. These margins rose to PKR 1.641 billion compared to PKR 1.363 billion in the same period last year.
Furthermore, stable foreign exchange rates and reduced bank borrowing costs improved the company's profitability, resulting in a profit of PKR 356 million ($1.27 million) compared to a loss of PKR 104 million in the same period last year.
However, global energy and commodity prices and the complexity of the raw materials supply chain remain challenging due to the ongoing conflicts between Russia, Ukraine and the Middle East. As a result, Pakistan's balance of trade and foreign exchange reserves are expected to remain under pressure, potentially creating further challenges for businesses in the coming months.
On a positive note, the long-term financing arrangements recently finalised with the World Bank and ongoing discussions about debt rescheduling with certain lending agencies and neighbouring countries, combined with stricter implementation of corrective fiscal measures, are expected to improve Pakistan's overall macroeconomic situation. This improvement is anticipated to support business development in the country's textiles and construction industries.
