Slowdown and decline are the key takeaways from one of the largest polyester staple fibre (PSF) players in the country; Ibrahim Fibres. For the first half of the fiscal 2016, the company's financials appear quite troubling. The top line fell by 18 percent year-on-year while the bottom line was lower by a massive 66 percent. Gross profits declined by an astounding 148 percent year-on-year, and the already constricted gross margin took another hit.
The whole polyester staple fibre (PSF) sector has taken a beating from Chinese dumping. Vast quantities of PSF have been imported from China at extremely low prices to create significant problems for the local PSF industry.
However, in October, the government imposed a provisional anti-dumping duty on imports of PSF into Pakistan from China for four months and things might improve a bit during the next quarter as a result. The massive reduction in crude oil prices was witnessed during the period under review, also resulted in inventory losses across the entire petrochemical chain including Ibrahim Fibres.
Aside from polyester business, it seems that the company's textile business is also embattled. Yarn production was also lower over the period under discussion. The problem is that since the price of cotton has decreased lately, its proportion in blended fabrics is now higher while PSF demand has been subdued.
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