Net Profits Of Pak Listed Textile Companies Drop 64.2% In Q1
The stress on Pakistan’s Karachi Stock Exchange (KSE) listed textile and garment manufacturing companies continued into the first quarter of 2024 as the sector grappled with various challenges.
So, while the KSE-100 Index broke all previous records, KSE listed textile and apparel sector companies posted a 64.2 percent year on year drop in net profits in the first three months of the current year.
However, as per the results available on PSX, sales revenue of the industry stood at PNR 133.27 billion in the reporting quarter as against PNR 108.48 billion from a year ago quarter, up 22.9 percent.
On the domestic front, high energy costs, high cost of finance and various taxes have escalated the cost of doing business.
The increasing energy costs and escalating raw material prices compressed the profit margins significantly.
The collected cost of sales of these listed companies ballooned by 35.0 percent year over year, depressing the gross profit by 16.1 percent to PKR 21.63 billion during the period under review.
“Other income of the sector declined by 20.8 percent and stood at PKR 2.79 billion in the first quarter of 2024 as compared to PKR 3.52 billion in the same quarter of earlier year,” Tex Talks reported.
Although selling and distribution expenses fell 27.9 percent and administrative expenses dropped 52.1 percent, other operating expenses surged by a massive 379.1 percent in the reporting quarter.
Financial costs escalated by 37.1 percent year on year to PKR 7.18 billion and the industry paid taxes at PKR 2.33 billion, up 38.7 percent from PKR 1.68 billion in the corresponding period of last year.
Experts say the next quarter would be challenging for the textile sector in view of current global economic situation and pressures on costs.
With real GDP expected to grow at 2 percent in the ongoing fiscal ending in June 2024, the overall economic activities in the textile and garment manufacturing are expected to remain subdued.
