The profits recorded by Pakistan’s textile companies jumped 32% in the first half of fiscal year 2020-21 against the corresponding period of previous fiscal year primarily due to higher sales and lower finance cost. The research house filtered out companies based on minimum market capitalization of Rs1 billion and included 21 firms in its sample.
The listed enterprises represent 82% of the textile sector’s market capitalization.
Mr. Saad Ziker, a reporter of Topline Securities, stated that “The textile sector’s profitability has shown a significant increase during the first half of fiscal year 2021 on a year-on-year basis primarily due to a spike in textile exports, improvement in other income and decline in finance cost. The increase in pricing and depreciation of the rupee against the US dollar by 4.
6% helped mitigate the impact of rising cotton prices as gross margins remained largely unchanged at 16%.
However, gross profits increased by 9% year-on-year.”
Overall, the revenues rose 12% during the period under review on a year-on-year basis as textile exports during the first half of fiscal year 2020-21 increased 8% in dollar terms and 13% in rupee terms, the report said. The backlog of orders from second half of fiscal year 2019-20 and diversion of orders from regional countries such as India and Bangladesh amid Covid-19 lockdowns helped support exports.
