Textile industry profit increased upto 183%

The textile sector’s profits rose 183 per cent to Rs12 billion in the first half of the current fiscal year of Pakistan  2010-11, mainly due to healthy profits in spinning sector. It is really surprising, that textile industries in Pakistan are not even giving production in their full capacity due to heavy loadshedding.

A selected sample of textile companies, which represented up to 95 per cent of stock market capitalisation in their respective sub-sectors, showed that the spinning, weaving and composite sectors registered notable earnings performances, with the spinning sector, once again, recording the greatest improvement. Sector sales augmented 39 per cent to Rs202.9 billion compared with Rs146 billion in the same period the preceding year. Textile fabrics exports (including home textile) rose by 26 per cent to $6.3 billion during July to December 2010, according to figures released by the Federal Bureau of Statistics.

SPINNING INDUSTRY

The spinning sector continued its stellar performance in the period under review, as revenues jumped to Rs71 billion from Rs46.2 billion in the corresponding period of fiscal 2010. Gross margins surged by 352 basis points to 17 per cent, predominantly led by a continuous rise in cotton and yarn prices, hence, increasing the spinning sector’s net profits by 303 per cent to Rs7 billion.

COMPOSITE INDUSTRY

Despite the sector’s sales amplifying by 31 per cent to Rs122.9 billion, gross margins shrank by 82 basis points to 15 per cent. This was due to an unprecedented increase in raw material prices during the period, which remained a constant concern for the value added sector.

Net profits grew 94 per cent to Rs4.7 billion on the back of a 75 per cent rise in other incomes to Rs2.1 billion.

WEAVING INDUSTRY

As a result of a sharp increase in raw material prices, the weaving sector’s gross margins took a hit, as a significant hike in yarn and polyester prices outpaced the increase in grey cotton prices. Resultantly, gross profit margins declined by 39 basis points to 11 per cent, despite revenues growing by 44 per cent to Rs8.9 billion owing to improved volumes.

Furthermore, operating profits rose 75 per cent to Rs690 million, leading to a 319 per cent increase in the profit after tax, which was recorded at Rs290 million.

Experts have different opinions about this major sky rocketing in textiles industry, few says it is happening mainly because of Cotton Prices have gone up considerably.