Pakistan’s textile sector’s profitability increased significantly by 32percent Y-o-Y during the first half (July-Dec.) of FY21 primarily due to an increase in exports, improvement in other income, and decline in finance cost.

According to data shared by Topline Pakistan Research, the country’s overall textile revenues increased 12 percent Y-o-Y during the period under review, with exports rising 8 percent Y-o-Y in USD terms and 13 percent Y-o-Y in PKR terms.

 

Topline’s data regarding the listed textile composite sector is based on profitability analysis of 21 companies that represent 82 percent of the sector’s market capitalization.

 

The increase in pricing and depreciation of PKR/USD by 4.6 percent Y-o-Y helped mitigate the impact of rising cotton prices, as gross margins remained largely unchanged at 16 percent. However, gross profits increased by 9 percent Y-o-Y.

 

According to Topline Research, local cotton prices increased 7 percent Y-o-Y to average Rs 9,154 per maund during 1H FY21. This was mainly due to 34 percent Y-o-Y decline in cotton production.

 

Other income of sample companies increased 22 percent Y-o-Y mainly due to remeasurement gain booked on Gas Infrastructure Development Cess (GIDC) as per the IFRS, and exchange gain recorded on net foreign asset exposure.

 

Finance costs also declined 14 percent Y-o-Y during 1H FY21, mainly attributable to lower interest rates as SBP reduced policy rate by a cumulative 625 bps to 7.0 percent.

 

Source: fashionatingworld.com