Dynea Pakistan Limited (PSX: DYNO), a key player in Pakistan’s chemical manufacturing sector, has demonstrated resilience and strategic foresight amid fluctuating financial landscapes. Established in 1982, the company specializes in producing formaldehyde, urea/melamine formaldehyde, and molding compounds, operating through its resin and molding compound divisions.
As of June 30, 2024, Dynea’s shareholding structure comprised 18.872 million outstanding shares held by 1,523 shareholders. Foreign investors held a 26.08% stake, while AICA Asia Pacific Holding Pte Limited, a related party, owned 24.99%. Local individuals accounted for 22.66%, mutual funds 12.35%, joint stock companies 9.46%, and banks, DFIs, and NBFIs 3.31%.
The company’s financial journey over the past five years has been marked by both challenges and recoveries. In 2019, Dynea experienced a 33.22% increase in net revenue, driven by growth in both resin and molding compound divisions. However, rising raw material and energy costs led to a decline in gross profit margins. The onset of the COVID-19 pandemic in 2020 resulted in a 12.60% drop in topline revenue, yet cost optimization measures enabled a 11.66% rise in net profit.
The year 2021 marked a significant rebound, with a 51.97% increase in topline revenue, attributed to the recovery in construction and allied industries. Both divisions saw substantial growth, and the company expanded its molding compound capacity to meet rising demand. Gross profit margins reached 23.96%, and net profit surged by 270.47%.
In 2022, despite a 39.68% increase in topline revenue, Dynea faced challenges due to raw material price hikes, currency depreciation, and import restrictions. These factors led to a decline in gross profit margins to 16.89% and a 33.78% decrease in net profit. The company responded by enhancing its resin and molding compound capacities and focusing on operational efficiencies.
The fiscal year 2023 saw a 16.19% increase in net sales, with the company commencing export operations, recording sales of Rs.45.276 million. Despite rising raw material costs and inflation, gross profit margins slightly improved to 17.1%, and net profit increased by 7%.
In 2024, Dynea’s topline ascended by 15.16% to Rs.12.76 billion, with export sales experiencing a significant boost, growing by 1379.58% to Rs.669.908 million. The company’s focus on cost-cutting measures, including the installation of solar plants, contributed to a 51% increase in gross profit, with margins reaching 22.42%. Net profit multiplied by 79.13% to Rs.1.19 billion.
During the first nine months of FY25, Dynea faced a 5.27% decline in topline revenue, primarily due to decreased local sales. However, export sales continued to grow, with the company initiating exports to Kenya. Despite inflationary pressures and high energy tariffs, Dynea managed to maintain a gross profit margin of 18%. Net profit stood at Rs.691.10 million, reflecting a 35.69% decrease compared to the same period in the previous year.
Looking ahead, Dynea aims to further expand its export footprint, targeting markets in Central Asia and the MENA region. The company is also investing in energy efficiency, with the installation of a 1.4 MW solar energy system at its Gadoon facility and a 375 KW system at its Hub plant. These initiatives are expected to mitigate energy costs and enhance competitiveness in international markets.chasesecurities.com
Despite facing challenges such as volatile raw material prices and currency fluctuations, Dynea Pakistan Limited’s strategic focus on export expansion, operational efficiency, and energy sustainability positions it for continued growth in the evolving global chemical industry.