Karachi: Crescent Fibers has reported a significant increase in losses for the quarter ending September 30, 2024, with a net loss of Rs. 96.5 million compared to a loss of Rs. 31.1 million during the same period last year, according to information available from the Pakistan Stock Exchange (PSX). The company's earnings per share also fell sharply to negative Rs. 7.77 from negative Rs. 2.51.

The textile manufacturer experienced a 21.6% drop in sales this quarter, primarily due to reduced demand that forced a cutback in production. The gross margin narrowed to 1.3% from 2.9% previously, impacted by general inflation and lower sales volumes. Distribution and administrative expenses increased to 3.4% of sales, up from 2.4%, reflecting the inflationary pressures and reduced capacity utilization. Operating margins turned negative at -1.1%, a decrease from the positive 2.3% margin recorded in the third quarter of 2023.

Financial charges for the quarter rose to 4.2%, exacerbated by increased interest rates and strained cash flows. The company's net margin worsened significantly, sinking to -6.2% from -1.6% in the prior year's quarter.

The broader textile industry faces numerous challenges including a sluggish global economy, high interest rates, and inflation which have collectively led to reduced demand and margin pressures. The global economic outlook remains weak with growth projections at a low of 3.1% for the next five years, indicating a tough road ahead for recovery.

In Pakistan, economic fragility is compounded by imprudent policies and a lack of reforms aimed at boosting competitiveness and fostering export growth. High operational costs, fluctuating exchange rates, and poor domestic cotton yields further strain the industry. Recent increases in energy rates and the continuation of unfavorable tax policies are expected to hinder the competitiveness of Pakistani textile products internationally.

Looking ahead, Crescent Fibers anticipates another challenging year but remains committed to making cautious, low-risk decisions to safeguard shareholder interests. The management extends its gratitude to the company’s employees, directors, shareholders, and bankers for their continued support and dedication.