ATBA, one of Pakistan’s leading manufacturers and distributors of automotive and storage batteries, faced significant financial challenges during FY24. With a notable decline in profit after tax (PAT) of approximately PKR 1.3 billion—down 41% from PKR 2.2 billion in FY23—the company had to navigate a complex landscape. This article explores ATBA’s performance, market challenges, and the strategic initiatives implemented to maintain its market position.
Performance Overview
The fiscal year FY24 proved to be challenging for ATBA as the company experienced a substantial decline in earnings. The earnings per share (EPS) dropped from PKR 62.86 in FY23 to PKR 38.37 in FY24, a clear indication of the financial pressure the company faced. The total battery market in Pakistan witnessed a decline of 10%, directly impacting ATBA, which holds a 24% market share. Despite these challenges, the company’s topline remained stable, attributed to stable pricing amid inflationary pressures.
Key Challenges
Several factors contributed to ATBA’s reduced profitability in FY24. A decline in the overall battery market, coupled with rising inflation, strained consumer purchasing power. Additionally, the company faced heightened production costs, particularly concerning electricity and gas prices, which directly influenced its overall production expenses.
ATBA’s management highlighted that the current business environment necessitates strict cost-control measures, especially concerning energy consumption. This is crucial to mitigate the rising finance costs, which threaten to erode profit margins further.
Diversified Sales Mix
One of ATBA’s strengths lies in its diversified sales mix. Around 30-40% of its revenue comes from the storage battery segment, while the remainder is generated by its automotive and motorcycle battery lines. The company’s management anticipates continued pressure on margins across these segments, reinforcing the need for strategic efficiency.
Strategic Initiatives and CAPEX Investments
Despite the economic downturn, ATBA is committed to maintaining its market share and achieving sustainable margins. A major part of the company’s strategy involves strategic capital expenditures (CAPEX) in areas such as health, safety, and environment (HSE), production processes, and engineering development. These investments are expected to enhance operational efficiency, enabling the company to better manage costs in the long run.
Furthermore, ATBA is exploring the potential of expanding its product lines, particularly in the automotive and motorcycle battery segments. The company recently launched the MF series of batteries (80AH, 45AH, 60AH), which have been well received in the market. In addition, the management is in the research and development phase for entry into the lithium battery market, signaling its intent to remain competitive and innovative.
Export Market Focus
Beyond local markets, ATBA is also focused on expanding its global footprint. The company already generates a significant portion of its revenue from exports and is actively pursuing new international markets. While Afghanistan has been a key market, the company is exploring further opportunities to diversify its international sales portfolio.