According to the latest toplines securities report, Pakistan’s listed textile companies have reported a profit in the 6MFY21.
According to the report Pakistan’s textile companies have an increased profit of 32% compared to the same period of last year.
The major reason according to Topline Securities, the major reason for that is the higher sales and lower finance cost.
Of the companies in the market, the chosen sample the chosen consisted of 21 companies with a minimum capitalization of Rs. 1 billion. The listed enterprises represent 82% of the total sector’s capitalization.
According to the report, the revenues of the organizations rose 12% YoY basis. During this period the value of textile exports increased 8% in dollar value, and 13% in rupee value. According to an analyst, the reason for this is the build-up of orders from the preceding year, and secondly, from countries choosing Pakistan as the world remained closed due to pandemic restrictions.
Along with that, inflation also played a part in the increase of the prices and thus increasing the value of exports from Pakistan.
This all led to an increase in the YoY profits of the company by 9%.
Local cotton prices increased 7% in the six months under review compared to the corresponding period of the previous year to an average of Rs9,154 per mound mainly due to a 34% decline in cotton production. This led to an increase in the cost of production and finally an increase in the price of products as aforementioned.
Finance cost declined 14% year-on-year in the first half of FY21, which was attributed mainly to lower interest rates. This led to the decrease in borrowing costs for the companies.
This all translated into companies generating more revenue and in return higher profits than the previous years.