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Shabbir Tiles and Ceramics Limited (STCL) reported weak financial results for the first quarter of the ongoing fiscal year 2024-25 due to the “stagnant” construction sector and reduced demand for building materials, reports WealthPK.

This downturn has been exacerbated by broader economic factors, further straining market conditions. As a result, STCL struggled to maintain its revenue streams and profitability, signalling a tough period for the company as it navigated the ongoing challenges in the industry. Shabbir Tiles and Ceramics, established on November 7, 1978, as a public limited company in Pakistan, specialises in manufacturing and selling tiles while also trading related building products.

According to the financial results, STCL’s net turnover dropped to Rs3.58 billion during 1QFY25, posting a 15% decrease from Rs4.22 billion over the same period of FY24. This decline reflects a broader market slowdown, where delays and cancellations of private sector construction projects have reduced demand for construction materials. Additionally, during the period under review, the company’s gross profit also fell sharply to Rs659.73 million from Rs1.09 billion in 1QFY24, due to lower sales and rising production and distribution costs.

Furthermore, STCL reported a loss-before-tax of Rs100 million, reversing the previous year’s profit-before-tax of Rs333 million. The construction sector’s stagnation, driven by rising inflation and reduced consumer purchasing power, shrank the market considerably, with activity primarily centered on renovation projects and government contracts. Additionally, private sector projects have been particularly affected, experiencing significant delays. Hence, slow economic growth and persistent inflationary pressures continue to create a challenging environment for tile manufacturers.

However, STCL remains hopeful for recovery amid positive macroeconomic indicators with inflation and interest rates continuing to ease. STCL Chief Executive Officer Syed Masood Abbas Jaffery is also optimistic that the government’s policies would boost the construction sector. He emphasised that the company’s diverse product range is vital for meeting customer needs and maintaining revenue stability during economic difficulties.

“STCL is also trying to enhance operational efficiency, reduce costs, source locally-produced raw material, and adopt alternative energy solutions to mitigate rising expenses.” “The company believes that strategic initiatives and potential macroeconomic improvements provide a foundation for future growth. The company continues to closely monitor market trends and explore strategies to overcome the downturn and ensure long-term success,” Jaffery underscored.

Credit: INP-WealthPk