VIS downgrades Archroma Pakistan outlook to negative

September 04, 2024 (MLN): VIS Credit Rating Company Limited (VIS) has revised the future outlook of Archroma Pakistan Limited (‘PSX: APL)  from ‘stable’ to ‘negative,’ the latest press release issued by VIS showed.

It said that risk is modest but may vary slightly from time to time because of economic conditions. The change in ratings outlook reflects weakening in the company’s financial risk profile during MY23 and 1HMY24, driven by the inherent cyclicality and current slowdown in Pakistan's textile and construction sectors, which are key markets for APL.

VIS believes an improvement in the overall macroeconomic conditions in Pakistan will benefit the local textile and construction industries, supporting potential recovery in the company’s financial performance.

VIS will continue to monitor the company’s financial performance going forward, it said.

Meanwhile, the rating agency maintained entity ratings APL at 'AA' for short-term and ‘A-1’ for long-term.’

The medium to long-term rating high credit quality; Protection factors are strong, it said.

Short-term rating of 'A-1’ indicates strong likelihood of timely repayment of short-term obligations with excellent liquidity factors. Previous rating action was announced on January 31, 2023.

APL incorporated in Pakistan as a public limited company and is publicly listed on the Pakistan Stock Exchange Limited (PSX).

The company's registered office is in Karachi. APL is a subsidiary of Archroma Textiles GmbH, based in Pratteln, Switzerland, which holds 75% equity stake in the company.

APL's operations include the manufacturing, importing, and distribution of chemicals, dyestuffs, coatings, adhesives, and sealants for various industries such as textiles, paints, paper, coatings, and constructions.

The company also serves as an indenting agent. Its manufacturing facilities are situated at Petaro Road, Jamshoro, and Landhi Industrial Area, Karachi, while its sales offices are located in Thokar Niaz Baig, Lahore, and Amin Town, Faisalabad.

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