Karachi: Fazal Cloth Mills Limited, a key player in Pakistan's textile industry, has reported a robust growth in profits for the fiscal year ending June 30, 2024, despite facing higher costs in several areas. The company's net sales increased by 25.05% to Rs. 97,160.98 million, up from Rs. 77,696.98 million in the previous year. However, the cost of sales saw a sharper rise of 27.41%, reaching Rs. 86,143.91 million compared to last year's Rs. 67,610.88 million.
The company's gross profit rose to Rs. 11,016.97 million, marking a 9.23% increase from the prior year's Rs. 10,086.10 million. Earnings before interest, depreciation, taxes, and amortization (EBIDTA) showed significant growth of 58.94%, reaching Rs. 13,385.82 million. The finance cost also surged by 64.30%, amounting to Rs. 8,337.43 million, which impacted the overall financial performance.
Profit before taxation climbed to Rs. 2,825.89 million, an increase of 77.19% from the previous year's Rs. 1,594.81 million. The company reported a profit after taxation of Rs. 1,785.29 million, a substantial rise of 204.61% from Rs. 586.10 million in the last fiscal year. Consequently, earnings per share also increased significantly to Rs. 59.51 from Rs. 19.54.
According to information available from the Pakistan Stock Exchange (PSX), Fazal Cloth Mills' balance sheet as of June 30, 2024, shows total assets of Rs. 99,781 million, a decrease from the previous year's Rs. 107,774 million. The company's equity slightly decreased to Rs. 44,321 million, while long-term liabilities rose to Rs. 25,106 million from Rs. 23,956 million in 2023.
The company has outlined its future outlook amid mixed economic signals. Fazal Cloth Mills noted an overall increase in demand for materials, although local sales remain lackluster. The company is consolidating current operations and expanding solar power capacity to reduce energy costs. However, the expansion and modernization plans are on hold due to high finance costs.
The company also highlighted challenges such as the withdrawal of zero-rating on local supplies and changes in the taxation regime, which could affect cash flow and export competitiveness. Rising exports are juxtaposed with high production costs driven by interest and energy prices, which are higher than those in competitor countries.
The Pakistan Cotton Ginners Association reported a decline in seed cotton reaching ginning factories, emphasizing the need for research to enhance cotton yield varieties in Pakistan.