International Steels Ltd Reports 71% Decline in Quarterly Profit Amid Lower Steel Prices

Karachi: International Steels Ltd (ISL) announced a significant decline in its quarterly profit, with Profit after Tax (PAT) dropping by 71% year-on-year to PkR355 million (EPS: PkR0.82) for the second quarter of fiscal year 2025. The decline was primarily driven by lower domestic prices of cold-rolled coils (CRC).

According to a statement by AKD Securities Limited, ISL’s revenue decreased by 11% compared to the same period last year, totaling PkR18.3 billion. This reduction was largely due to the falling prices of CRC in the domestic market.

The company’s margins also faced pressure, with CRC-HRC margins decreasing to US$88 per ton, a 16% year-on-year drop. Consequently, the gross margins fell to 8.1% from 13.9% in the same period last year.

Despite a 21% year-on-year reduction in operating expenses, which stood at PkR559 million, finance costs increased by 29% to PkR226 million. This increase was attributed to significantly higher short-term borrowings, despite a decline in interest rates.

On a sequential basis, ISL’s profitability nearly doubled, increasing by 98% quarter-on-quarter, as higher revenue and improved gross margins provided a boost. This improvement was likely fueled by gains in domestic market share after a reduction in finished product inflows from the FATA/PATA regions. The Federal Board of Revenue (FBR) recently imposed stricter controls on the import of raw materials for steel producers in these regions, limiting imports to local consumption levels.

The effective tax rate for the company rose to 42%, compared to 29% in the same period last year. Despite the challenges, AKD Securities Limited expressed optimism about ISL’s future prospects, citing factors such as the rebound in primary margins, declining interest rates, regulatory measures to curb illicit dumping, and falling electricity tariffs. The firm maintained a ‘BUY’ recommendation on ISL stock, with a target price of PkR120 per share for December 2025 and a forecasted dividend yield of 4.8% for the fiscal year 2025.

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