Lykis issues cautionary outlook amid adverse global economic environment

Lykis has issued a cautionary statement regarding deteriorating external conditions that may materially impact its business and financial performance.

The Company is operating in an increasingly adverse global economic environment marked by sustained inflation, rising operating costs, and weakening consumer demand across several international markets. Significant increases in raw material prices, freight charges, energy costs, and logistics expenses are placing severe pressure on margins and profitability.

Additionally, foreign exchange volatility has intensified in key export regions, particularly in emerging economies. Currency depreciation and instability may result in lower export realizations, pricing challenges, increased hedging costs, and potential losses on receivables, adversely impacting cash flows.

The Company is also facing heightened geopolitical and security risks, including political instability, civil unrest, and armed conflicts in certain African and developing markets. These developments have already contributed to shipment delays, border disruptions, rising insurance costs, and higher operational risks, with the potential for further escalation.

Infrastructure and logistics conditions in several markets remain weak and unreliable, with persistent issues such as port congestion, transportation inefficiencies, energy shortages, and regulatory bottlenecks. These constraints may lead to execution failures, customer dissatisfaction, loss of contracts, and reduced competitiveness.

Furthermore, the Company operates across jurisdictions with frequently changing regulatory and trade policies. Sudden changes in import/export rules, taxation, tariffs, foreign exchange controls, or sanctions could result in blocked shipments, higher compliance costs, or restricted market access.

From a financial standpoint, the Company faces increasing counterparty and credit risks, including delayed payments and higher probability of customer defaults in certain markets. This may place significant strain on working capital, liquidity, and balance sheet strength.

In light of the above, Lykis cautions that future revenues, margins, and growth prospects remain highly uncertain, and business performance may remain volatile and unpredictable in the near to medium term.

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