Lucky Core Industries Limited (LCI) Earnings Call Transcript & Summary

[indiscernible] everyone. So I will take you through the quarter [ reconcession ] presentation of LCI, which will be from [indiscernible] then the session will be open for question and answers. So economic factors of Pakistan were better compared to same period last year, currency appreciated by 1.98% average policy date reduced during the year were exited at 11.5%. [indiscernible]. So I'm the CFO of LCI, and I will be taking you through the [indiscernible] session. So the currency economic factors were positive for Pakistan during the last year, currency appreciated by 1.9% policy rate [indiscernible] reduced but [ exited ] at 11.5%. Inflation was lower during the year, but in the later part of the year. It increased because of the war-related situation and [indiscernible] oil prices. Large-scale manufacturing grew by 0.98%, approximately 5% compared to same year last. So LCI revenues [indiscernible] in the last year PKR 113 billion year, which was lower by 6% EBIT to PKR 14.7 billion, 18% lower compared to same year last year. Profit after tax was PKR 9.7 billion compound same period last year. Our earnings per share PKR 20.99 approximately close to PKR 21 a share. Consolidated financials maybe even the same performance reflectively because there is a subsidiary of LCI, which is [indiscernible] in improved or new to cash profit in -- that was not [indiscernible]. Other market capitalization, we came to the company [indiscernible] a million net debt from our share. Our current ratio was 1.6%. Return on capital employed was 32%. Our dividend company announced here approximately 50% of our reduced [indiscernible] PKR 10.5 per share [indiscernible]. So basically, this is the performance of last 5 years of key parameters, return on capital employed or 32% to current year may reduce [indiscernible]. [indiscernible] 9.7 billion of payout ratio and 50% of that net debt [indiscernible] was INR 53 billion, gearing high between [indiscernible]. Cash generated from operations was around PKR 25.9 billion. Free cash flow even [ cleaner either ] our CapEx result were of EUR 4.2 billion. Our performance business-wise taking to [indiscernible] business made turnover 9% lower the same period last year [indiscernible]. It was 33% lower compared to the same period last year at PKR 5.68 million. Turnover for [indiscernible] 34.5 million, 13% lower compared to same period last year. Earnings before interest, PKR 79 million, which was 74% lower compared to same period last year. Pharmaceuticals [indiscernible] performance, [indiscernible] turnover in the onset [indiscernible] from a 16% higher time compared to same period last year. Chemicals and agreement on most [indiscernible] turnover seeing 8% [indiscernible] animal health [indiscernible], EBIT 20% to PKR 1.98 billion, or is [indiscernible] overall company guided to have 18% [indiscernible] compared to same period last year. PKR 14.7 billion of turnover, 6% over the same period last year [indiscernible]. Business side at performance in [indiscernible] while challenges in terms of export is [indiscernible] noise significantly declined compared to same period last year, almost 60% were in terms of volume. Global volumes of [indiscernible] rate again, export both significant decline [indiscernible] operating capacity to operate [indiscernible]. And that's why our performance is lower compared to the same period last year. On [indiscernible], they were cheaper imports available in Pakistan or [indiscernible] loyal capacity or here are production or sales decline going compared to the same period last year or the imported price in China seems significantly lower [indiscernible] compared to the local bank. [indiscernible] we give us sales volume on term margin impact, which led to the significant decline in [indiscernible]. Pharmaceutical [indiscernible] products as a hedge of 8 billion per turnover [indiscernible] or Pfizer [indiscernible] just full year acquisition of [indiscernible] or May-September net business assets or plant or [indiscernible] pricing increase, we have economy pressure volumes regarding other pressures all across the board, overcharging [indiscernible] order closure will not be prochannel pharmaceutical [indiscernible] property same team. Annual Health business may volumetric growth really a poultry or live stock. [indiscernible] to the EBIT is higher by 20% compared to the same period last year. [indiscernible] or a large vitality medicine can be sold online [indiscernible], which would [indiscernible] further benefits going forward. [indiscernible] because in agreement because of [indiscernible] can put cycle is to go on site agents they just give us a more formative the overall turnover on a comp but EBIT was lower by 5% compared to same [indiscernible]. Outlook, they can obviously many local demand in being impacted efficiently with us. They're working about to [indiscernible] prices were in sites in plus geopolitical uncertainty or macro environment, again, interest rate guide pressure with [indiscernible] inflation. Imports [indiscernible] pressure because [indiscernible] Pakistan, China, because a [ copy ] reduced price, which is a pressure because lower volumes are [indiscernible] product is available at such as a new level to [indiscernible] on both. And again, on pharmaceutical or [indiscernible] and for future growth or distribution expansion. That's a presentation from our side.

And now I will first go through the question and answers, which was said online [indiscernible], and then I will take the question [indiscernible]. So basically, sold our polyester [indiscernible] they was [indiscernible] volumes of 424,000 tonnes of [indiscernible] volume take compare to 450,000 tonnes in the same period last year. The volume [indiscernible] quarter 4 may be a [indiscernible] declined 98,000 tonnes [indiscernible] versus in the same period last year [indiscernible] volumes. [indiscernible] pricing actually [indiscernible] gave a pricing on decent even 96,000, [indiscernible] partner pricing at some supply retain based on volume metrics [indiscernible] the gross price on [ a regional ] level, 96,000 tonnes. [indiscernible] power source actually soda majority [indiscernible] operate 95% to operate is signed amended by [indiscernible] the other to biomarker portion and, obviously, other it's a smaller portion. PSF [indiscernible] a major source at [indiscernible]. Gas and solar is the major source currently here. And again, the local market [indiscernible] obviously, local market is challenging because who knows [indiscernible] every day our noted pricing when [indiscernible] China sale donated almost double [indiscernible]. But [ sodas ] U.S. still is being sold at lower prices this year, and we're talking discontinue investments. Pharmaceutical [indiscernible] Margins, obviously, 43% [indiscernible]. Just [indiscernible] volume at 8% decline our price increase [indiscernible] would have there 5% increase. Major decline reasonable [indiscernible] may quarter 2 [indiscernible] --

43 gross net --

Gross margin.

Chemicals and obviously, statement that we got [ 18-year ] crop cycle book have been disturbed the hire over the past 2, 3 years. Chemicals of [indiscernible] and animal health care, utility medicine plant, we saw all the [indiscernible] in the presentation of [indiscernible] online [indiscernible] last year, in the most large [indiscernible]. These were the questions sent through the online, email [indiscernible] now.

[indiscernible] pharmaceutical [ mid ] for this coming year can you clarify [indiscernible] product launch, [Foreign Language]?

[Foreign Language]. Obviously, a continuous [indiscernible] products launch historically in the user products are still launching, that will continue. [Foreign Language].

[Foreign Language].

Sorry, I missed the certain part of the presentation. [indiscernible], the BSF segment, obviously, there is some kind of antidumping. So there's some kind of dumping by the Chinese, right? Apart from that, [indiscernible] like a year. So what is this -- what is ICI doing on this front? And the other thing is the definitive anti-dumping duty, how are you trying to fight against the [indiscernible] importers, they try to game in the system where [indiscernible] and then they still keep on importing the product, right? So what is the old perspective with regards to how this should be [indiscernible] from the industry? Because at the end of the day, the biggest problem for Pakistan is a -- I mean we don't have a chemical -- we don't have a petrochemical chain, right? So ultimately, we will always be a very higher cost producer compared to the Chinese or compared to other places [indiscernible]. So isn't that very important to now talk to the government about that if you don't resolve this, then manufacturing, it will effectively cease to -- no one will want to manufacture. So can you like tell me what is the whole what do you say, what is the gamut of options which the company is now deciding to do again? Or you don't really the -- it doesn't matter to you?

[Foreign Language]. [indiscernible] plant generally a plant and more so at economies of scale [ caveating ] compared to. Obviously, government is obligated something like be able to control the last 2 years [indiscernible] we target [indiscernible] Pakistan and [indiscernible], was selling at below the local rates. No significant difference such [indiscernible] markdown 130 per [indiscernible] stuff, the imported product was seen. So this happened.

And what is the price of the product right now?

PKR 445. Okay. Last year --

8% to 9% roughly is the impact?

They can push in [indiscernible], is a very volatile kind of commodity. Prices, the same size, you better -- Currently, you have Polyester Pakistan to a local price [indiscernible]. I'm saying that last year, [indiscernible]. Trade rates almost double in line September 30 were double trade to imports is expense volatility that the enrollment is [indiscernible]. [Foreign Language].

So what is your operating rate right now?

70% to 80%.

And what is the maximum the plant can go to?

The plant [Foreign Language].

So what percentage of utilization?

Okay. Okay. [Foreign Language].

So sir, basically, [indiscernible] industry [Foreign Language] would aggressively you said an anti-dumping duty [indiscernible], et cetera. But they are very slow -- and the importers are gaming the system every time. Even you the -- sorry, [Foreign Language] But we will let accounts say on import cargo there to circumvent the whole system, right? So I'm sure there must be a way where the industry itself and the companies together have to aggressively [indiscernible] in addition to the [ 400 ] competition so or [ LTC Casitas ] or could certain types of determination of time like that but you guys have to proactively do it rather than reactively. Because ultimately, at manufacturing are we up 70% paid up 30% with [indiscernible].

[Foreign Language]. So import is not the issue. The total demand impact, obviously, you may not the [indiscernible].

[Foreign Language].

Excise was slightly --

No, no. For Q2.

[Foreign Language].

[Foreign Language].

[Foreign Language].

I think 2%?

On average 9% you take over to. So obviously, [Foreign Language].

But what is the [ NTCs ] role now? Is it faster or slower than the last time?

Overall they can do is better compared to [Foreign Language]. We will save the say --

You said 10% to 15% [indiscernible].

[Foreign Language]. We are trying to get maximum whatever is possible for the [indiscernible]. Obviously, government national tariff policy mature, declining rates go.

But, sir, the question I'm asking is, can you go to [indiscernible] anything, if the cost of production is actually going up for whatever reason from actually to [indiscernible].

So I have to concurrently also impact that 100% [indiscernible] argument in Pakistan [indiscernible]. And that's why it's kind of inclination [indiscernible].

[indiscernible] as of right now is just put duties on Chinese EVs, as of right now?

We are also explaining government here [Foreign Language].

Okay. [indiscernible], if you can open your pharmaceutical business -- Animal Health or pharmaceuticals, these are 2 obvious growth areas for you guys as well as for a lot of other companies. So what is the -- what do you say, what is the company's strategy on the pharmaceutical side?

Pharmaceutical [Foreign Language]. [indiscernible] to be consolidated at the economies of state is no [Foreign Language].

[indiscernible] revenue for the next 2 years?

[Foreign Language].

Okay. And is there any M&A opportunity right now in the sector?

[Foreign Language].

But is that clarity in next 3 months, [indiscernible], you [indiscernible]?

[Foreign Language]

[indiscernible] are potentially going to exit.

[Foreign Language].

[Foreign Language].

[Foreign Language].