PACRA updates entity ratings of PIBTL

June 20, 2023 (MLN): Pakistan Credit Rating Agency Limited (PACRA) has updated the entity ratings of Pakistan International Bulk Terminal (PSX: PIBTL) at "A" for the long term and "A2" for the short term with a developing outlook forecast, the latest press release issued by PACRA showed.

PIBTL has secured a distinguished position in its operating segment due to its strategic importance in the power and cement sector.

With a fully automated infrastructure, the company's annual capacity hovers around 12 million Metric tonnes (MT) for inbound coal handling and 4m MT of outbound clinker and cement handling.

The demand for imported coal in the industry is significantly reduced due to macroeconomic conditions including but not limited to import restrictions, severe devaluation of PKR against USD, and the slowdown of economic activities.

Therefore the volumes handled by PIBT significantly dropped. During 9MFY23, PIBT handled 3.8m tonnes of cargo against 6.2m tonnes in the same period last year (FY22: 8.2m tonnes, FY21: 10.1m tonnes).

Amid declining volumes, PIBTL topline clocked at Rs6.9 billion (9MFY22: Rs7.4bn).

The bottom line of PIBT turned red and posted a net loss of PKR 2.5bn (9MFY22: loss of Rs151m, FY22: loss of Rs991m).

The loss is majorly due to the impact of currency devaluation on USD-denominated foreign loans.

The company's free Cash Flow from Operations (FCFOs) is also affected, impairing its ability to promptly service its debt.

In view of the prevailing economic conditions, the company requested its foreign lenders International Finance Corporation (IFC) and OPEC Fund for International Development (OFID) to defer the payment of its principal installments due on June 23,  as notified on PSX, notice dated June 15, 2023.

The formalization of this arrangement is in process and is expected to finalize soon.

However, the company ensures to make interest repayments in a timely manner.

Developing outlook and rating watch reflect the ongoing development towards the finalization of re-profiling arrangements with the foreign lenders as requested by the company.

Moreover, the timely conclusion of the arrangements remains imperative for holding the ratings of the company.

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