Pakistan’s textile industry sees 64.2 per cent decline in net profit

WEB DESK: Pakistan’s textile industry struggled during the first quarter of 2024, facing headwinds in both domestic and export markets.

The sector’s net profit saw a significant drop, plummeting by 64.2 per cent year-on-year (YoY), with figures recorded at Rs5.27 billion compared to Rs14.72 billion during the same period last year (SPLY).

The decline in profitability was driven by multiple factors. The global economic slowdown led to subdued demand for textile products in international markets, causing overall exports from the industry to remain flat.

On the domestic front, high energy costs, expensive financing, and increased government taxation significantly escalated the cost of doing business, impacting the industry’s bottom line.

Despite the challenging conditions, the sector’s sales revenue experienced a notable increase, growing by 22.9 per cent YoY to reach Rs133.27 billion, up from Rs108.48 billion in SPLY.

These results, compiled by Mettis Global from various listed textile companies including GATM, ILP, KTML, and NML, suggest that the industry remains resilient in terms of sales.

However, the rising costs associated with energy and raw materials put pressure on profit margins.

The cost of sales rose by 35.0 per cent YoY, contributing to a 16.1 per cent decrease in gross profit, which stood at Rs21.63 billion in Q1 2024. Consequently, the gross margin fell to 16.23 per cent from 23.76 per cent in SPLY.

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