Lahore, August 09, 2019 (PPI-OT): The ratings reflect Ibrahim Fibres’ leading position in the local polyester staple fibre (PSF) industry and very strong financial profile accentuated by low leveraging and strong coverages. Imposition of anti-dumping duty on PSF imported from China since Feb-16 has supported volumetric growth and margins. Meanwhile, local demand also witnessed increasing trend. Unfavourable movements in crude oil prices impacted the entire petrochemical chain during 9MFY19, resulting in decreased PSF prices and inventory losses, deteriorating the Company’s core margins and profitability. Given strong domestic demand and efficient production, performance is expected to recover, with a recovery in oil prices, while currency devaluation is likely to support domestic PSF prices.
The Company’s spinning segment continues to support its overall profitability. Keeping this in view, the Company is in the process of expanding its spinning capacity. The expansion is being undertaken with a mixture of debt and internally generated cash flows and is expected to come online in 4QFY20. The ratings further incorporate the Company’s association with the Ibrahim Group, which has demonstrated strong support.
The ratings are dependent on the Company’s ability to sustain its margins and profitability. Optimal utilization of upcoming capacity enhancement and improvement in margins is considered important. Excessive borrowings and/or prolonged downturn in margins would impact the ratings.
For more information, contact:
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Category: General Business News