Pakistani Textile Companies’ Profits Increased By 32%

This was primarily due to higher sales and lower finance costs.

Textile Industry Has Finally Earned a Profit After 10 Year: APTMAThe profits recorded by Pakistan’s listed textile companies increased 32% in the first half of the fiscal year 2020-21 against the previous fiscal year’s corresponding period.

This was primarily due to higher sales and lower finance costs.

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“The textile sector’s success has shown a significant surge during the first half of the fiscal year 2021 on a year-on-year (YoY) basis,” stated a report of Topline Securities.

“This was mainly due to a spike in textile exports, improvement in other income, and decrease in finance cost.”

The investigation house filtered out companies based on a minimum market capitalization of ₨. 1 billion and included 21 firms in its sample.

The recorded enterprises represent 82% of the textile sector’s market capitalization.

Overall, the revenues rose around 12% during the period under review on a YoY basis as textile exports during the first half of the fiscal year 2020-21 increased 8% in dollar terms and 13% in rupee terms.

The Topline Securities analyst, Saad Ziker, said that the backlog of orders from the second half of the fiscal year 2019-20 and diversion of orders from regional countries such as India and Bangladesh amid Covid-19 lockdowns helped support exports.

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Also, the uptick in general prices due to the commodity supercycle also played a vital part, he said.

“The surge in pricing and depreciation of the rupee against the US dollar by 4.6% helped mitigate the impact of surging cotton prices as gross margins remained largely unchanged at 16%,” he said.

“Nevertheless, gross profits increased by 9% year-on-year.”

Local cotton prices surged 7% in the six months under review compared to the previous year’s corresponding period to an average of ₨. 9,154 per maund, mainly due to a 34% decrease in cotton production.

Other earnings of the companies included in the sample surged 22% in July-December 2020 primarily due to re-measurement gains booked on the GIDC (Gas Infrastructure Development Cess) as per the IFRS and trade gains recorded on net foreign asset exposure.

Finance cost declined 14% YoY in the first half of FY21, attributed mainly to lower interest rates.

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