Textile sector posts scintillating results

08 Mar '11

3 min read

Backed by tremendous rise in exports during the current financial year, the revenue and profit of the Pakistan's textile sector have gone up significantly in the initial six months of the current fiscal that started from July 1, 2010.

Revenues and profits of the sector registered a rise of 39 and 183 percent, respectively during the period under review, on account of sizeable growth achieved across all the segments of the textile sector, namely spinning, weaving and composite.

However, the spinning segment outshined the other two segments, with sizeable growth in revenue and profits.

Meanwhile, riding on the back of improvement in the prices of the products in the export as well as in the domestic markets, the textile sector's sales turnover registered a year on year rise of 39 percent and grew to Rs. 202.9 billion, during the period under review.

The country's textile exports for the first half of the current financial year rose by 26 percent to $6.3 billion, from a year ago.

The rise in sector's profitability was led by the spinning industry to a large extent. The consolidated earnings of the sector too registered remarkable increase of 183 percent over the last year to grow to Rs. 12 billion.

Further, though the composite segment's revenue with a year on year rise of 31 percent grew to Rs. 122.9 billion, its gross margins declined to 15 percent, that is a year on year fall of 82 bps.

This mainly happened due to an exceptional rise in the prices of raw material, during the concerned period, which remained to be a cause of concern for the value added industry throughout the period.

The spinning segment kept on delivering good results during the period under review, as the segment's revenues while registering a year on year rise of 54 percent grew to Rs. 71 billion, as against Rs. 46.2 billion during corresponding period last year, while the segment's gross margins too with a rise of 352 bps grew to 17 percent. Overall profits of the segment posted a rise of 303 percent to grow to seven billion rupees.

A sharp rise in the prices of the raw materials, adversely affected the gross margins of the weaving sector, as a sizeable increase in the polyester and yarn prices wiped out the gains from increase in grey prices.

As a result of this, the segment's gross margins witnessed a year on year fall of 39bps to stand at 11 percent. This was in spite of that the segment's revenues registered a year on year rise of 44 percent to grow to Rs. 8.9 billion, with better volumes.

However, the operating profits, after registering a year on year rise of 75 percent rested at Rs. 690 million, owing to which the sector earned Rs 290 million in profit-after-tax, a year on year rise of 319 percent.

Fibre2fashion News Desk - India

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