Pakistan’s textile sector’s profitability increased significantly by 32per centYoY 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 12per centYoY during the period under review, with exports rising 8pc YoY in USD terms and 13per centYoY in PKR terms.
Topline’s data regarding the listed textile composite sector is based on profitability analysis of 21 companies that represent 82per cent of the sector’s market capitalization.
The increase in pricing and depreciation of PKR/USD by 4.6per centYoY helped mitigate the impact of rising cotton prices, as gross margins remained largely unchanged at 16per cent. However, gross profits increased by 9per centYoY.
According to Topline Research, local cotton prices increased 7per centYoY to average Rs9,154 per maund during 1HFY21. This was mainly due to 34pc YoY decline in cotton production.
Other income of sample companies increased 22pc YoY mainly due to re-measurement 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 14per centYoY during 1HFY21, mainly attributable to lower interest rates as SBP reduced policy rate by a cumulative 625bps to 7.0per cent.