Karachi: The Board of Directors of Artistic Denim Mills Limited has released the Directors' Review along with the un-audited condensed interim financial statements for the nine-month period ending March 31, 2025. The Company, categorized under the Textile sector, reported a decline in net sales and gross profit, attributing the reduction to ongoing economic challenges and inflationary pressures globally.
During this period, Artistic Denim Mills recorded net sales of Rs. 13.92 billion, a decrease from Rs. 16.17 billion in the same period the previous year. The decline in sales is primarily due to the economic slowdown and global inflationary pressures. The Company's gross profit also saw a significant reduction, standing at Rs. 930.32 million compared to Rs. 2.01 billion in the previous year. This decrease was largely driven by increased production costs, particularly escalating energy prices.
Despite the challenging environment, Artistic Denim Mills managed to reduce its finance costs by 49.34%. This was achieved through strategic initiatives aimed at optimizing borrowings and improved working capital management. The Company employed a balanced mix of local and foreign currency financing to control interest costs.
However, the financial results for the period reflect a net loss after tax of Rs. 222.40 million, compared to a net profit after tax of Rs. 316.20 million in the corresponding period last year. Consequently, the loss per share was reported at Rs. 2.65, contrasting with earnings per share of Rs. 3.76 in the previous year.
According to information available from the Pakistan Stock Exchange (PSX), the textile sector, including Artistic Denim Mills, continues to face significant challenges. The sector is grappling with higher operational costs, which are more pronounced than those faced by regional competitors, impacting overall competitiveness. Exporters have urged the government to reconsider recent amendments to the Export Facilitation Scheme, warning that these changes could lead to trade disruptions and increased compliance burdens.
On a positive note, global buyers have redirected clothing orders from Bangladesh and China to Pakistan, presenting an opportunity for the textile exporters to expand their market share. Nonetheless, the rising gas tariffs and a phased 20% levy on natural gas supplied to captive power plants are expected to adversely affect sector performance in the forthcoming months.
The U.S. tariffs pose additional risks to the global economy, potentially disrupting textile and apparel supply chains and driving up prices. For Pakistan, these tariff hikes could significantly impact the textile sector. To safeguard exports and competitiveness, Pakistan is encouraged to pursue policy-driven approaches, including negotiating reciprocal trade agreements to reduce tariffs on Pakistani textiles and duties on critical U.S. imports such as raw cotton.
The Asian Development Bank projects a gradual economic recovery for Pakistan, with GDP growth forecasted at 2.5% for the financial year 2024-25, rising to 3.0% in 2025-26. Inflation is expected to average 6.0% in 2025, slightly declining to 5.8% in 2026. However, the inflation outlook remains subject to external and domestic risks, including global commodity prices and shifts in trade policy.
Looking ahead, Artistic Denim Mills remains committed to cost optimization by maximizing capacity utilization and streamlining costs. The Company is also exploring cost-effective energy alternatives, including the successful commissioning of a 2.32 MW solar power facility, with plans to install an additional 2.57 MW within the current financial year.
The Board of Directors expressed gratitude to stakeholders, including customers, suppliers, bankers, shareholders, and regulatory bodies, for their continued support. They also commended employees for their dedication in the challenging business environment.