Shams ul Nisa

Archroma Pakistan Limited has demonstrated remarkable resilience and strategic adaptability, achieving substantial profit growth despite economic challenges in the first quarter of the ongoing financial year 2024-25, reports WealthPK.

Notwithstanding the rising energy costs, fluctuating commodity prices and geopolitical uncertainties, including the Ukraine crisis and tensions in the Middle East, the company has fared well, successfully reinforcing its market position. The firm has come up with innovative business strategies to navigate the volatile global conditions.

During the period under review, the textile and construction industries, which are the major consumers of Archroma’s products, faced a slowdown in demand both domestically and globally. This decline was primarily driven by rising energy costs and limited raw material availability. However, Archroma managed its market foothold by maintaining strong customer support and optimising operational efficiency.

By refining its sales product mix, Archroma has focused on high-profit segments while reducing exposure to less lucrative markets. Moreover, stable exchange rate and lower borrowing costs have helped the company enhance its profitability. The company has continuously taken debt restructuring initiatives and also secured long-term financing agreements to strengthen its financial stability.

The company’s acquisition of the assets of Huntsman Textile Effects, now operating as Archroma Chemicals Pakistan, has broadened its product range, solidifying its market position and opening up fresh avenues for expansion in the textile and construction sectors. Archroma Pakistan demonstrated strong resilience in 1QFY25, posting a net profit of Rs356 million, marking a substantial recovery from the Rs104 million loss incurred during the first quarter of the previous fiscal.

Notably, Archroma achieved a significant increase in gross profit, which surged from Rs1.363 billion in 1QFY24 to Rs1.641 billion 1QFY25. The company’s net sales remained stable at Rs7.217 billion, showing only a marginal decline from Rs7.233 billion recorded over the same quarter of FY24. This improvement was primarily driven by enhanced operational efficiencies and strategic cost-saving measures, reflecting the effectiveness of Archroma’s strategic initiatives in overcoming external pressures.

Despite the ongoing economic uncertainties driven by geopolitical tensions, high energy and commodity costs, Archroma remains optimistic that the government’s stricter fiscal policies would help stabilise economic conditions, benefiting industries dependent on imports and global trade. The company’s management is confident in maintaining financial stability and leveraging its expanded portfolio post-acquisition to drive growth.

Credit: INP-WealthPk