Aisha Steel Swings From Rs1.35 Billion Loss to Rs981 Million Profit

KARACHI: Aisha Steel Mills Limited just posted its best year in recent memory. Revenue up 61%. A Rs1.35 billion loss turned into a Rs981 million profit. And ordinary shareholders get none of it. The board is putting nearly Rs345 million toward accumulated preference dividend entitlements first.

Revenue came in at Rs54.24 billion, up from Rs33.75 billion last year a 61% increase. Gross profit grew even faster, jumping to Rs5.93 billion from Rs1.67 billion and pushing gross margin from 4.94% up to 10.89%. Operating profit followed the same pattern, climbing to Rs3.64 billion from Rs604 million.

Volume drove most of it. The company sold 257,144 tons of cold-rolled and galvanized coils over the year, up 73% from 148,942 tons the year before. Exports moved even faster, more than doubling to 61,583 tons from 25,456 tons, while Aisha Steel's share of the local market grew to 17% from 12%.

Production had to keep pace, and it did. Output hit 266,476 tons, against 162,599 tons last year a 64% jump. That pushed capacity utilization up to 39% from 23%, and management is now targeting north of 50% before the current financial year wraps up.

Also Read: Pakistan Steel Mills Losses Soar to Rs245.9 Billion, Audit Reveals

Elsewhere on the income statement, finance costs eased to Rs1.73 billion from Rs2.73 billion, a welcome break for a company that's carried heavy leverage for years. Levies climbed to Rs134 million from Rs54 million, while income tax flipped from a Rs368.3 million credit last year to a Rs640.5 million charge this year. Earnings per share swung from a Rs1.55 loss to a Rs0.99 profit.

Where does the money actually go

The board wants to pay out Rs343.71 million in cumulative preferential dividends on its ASLPS shares four years of accumulated entitlements going back to July 2022 which works out to Rs7.76 per share. A much smaller Rs1.14 million dividend applies to the ASLCPS shares, at Rs8.25 apiece. The company has scheduled its Annual General Meeting for October.

Here's the twist: much of this won't actually be paid in cash. Under the terms tied to these preference shares, Aisha Steel plans to hand out ordinary shares instead one ordinary share for every Rs10 of ASLPS dividend owed, and 2.285 ordinary shares for every Rs10 of ASLCPS dividend, after tax.

Tariffs, taxes and a volatile raw material market

Washington's 50% tariff on steel imports from Pakistan hit Aisha Steel's U.S. shipments hard. The company found some offset by shipping more to Europe instead. Management says rising U.S. steel prices could make American exports worthwhile again, tariff or no tariff.

Back home, the sales tax exemption that used to cover imports from Pakistan's FATA/PATA region is gone. Those imports now carry a 12% rate instead of zero, and the company expects that figure to keep rising toward the standard 18%. Separately, the National Tariff Commission slapped anti-dumping duties on substitute products like ZAM and Galvalume, closing off a route importers had been using to dodge duties on standard coil. Both moves, Aisha Steel says, worked in local producers' favor.

Then there's the raw material side of things. Hot-rolled coil the input everything else at Aisha Steel depends on sat around $450 a ton FOB China for most of the year, spiked to roughly $550 in May as the U.S.-Iran conflict escalated, then eased back down to about $490 by June.

The part the profit number doesn't show

For all the profit growth, Aisha Steel actually burned more cash than it brought in. Net cash used in operating activities widened to Rs2.95 billion from Rs1.67 billion. Inventories more than doubled, to Rs18.4 billion from Rs8.1 billion. Trade receivables jumped to Rs3.51 billion from Rs1.48 billion. Working capital simply grew faster than the cash coming in the door. At the same time, financing cash flows show Rs6.92 billion in sponsor contributions during the year, alongside Rs3 billion in repayments to the sponsor.

What emerges is a company genuinely on the mend: volumes are rising, margins have recovered, and trade policy has turned more supportive. The harder test sits beyond the income statement, though. Aisha Steel still has to turn that operational momentum into real cash generation while pushing capacity utilization past 50%. That, more than another headline profit figure, will determine whether FY2026 marks a genuine financial reset or just the opening chapter of a longer turnaround.