Qudsia Bano

Sapphire Textile Mills’ net turnover rose to Rs34.66 billion in the first six months of the ongoing fiscal year 2022-23 from Rs27.73 billion over the same period of last year, showing a 25% growth year-on-year. The company’s gross profit, however, came down to Rs4.7 billion in 6MFY23 from Rs5.9 billion in 6MFY22, showing a negative growth of 22%.

The company’s finance cost also increased from Rs1 billion in 6MFY22 to Rs1.8 billion in 6MFY23. The profit-after-tax also fell 50% to Rs1.77 billion in 6MFY23 from Rs3.53 billion in 6MFY22 mostly because the margins of the textile products declined. Margin pressure was caused by a slowdown in demand and increased financing costs as a result of the State Bank of Pakistan's policy rate increases, reports WealthPK.

Performance in 2021-22

The company's net turnover jumped from Rs38.47 billion in FY21 to Rs61.37 billion in FY22, showing a 60% growth. The rise in net turnover was primarily because of higher selling prices. The rise in raw material costs and the depreciation of the Pakistani rupee led to an increase in selling prices. The company's gross profit for FY22 stood at Rs11.85 billion, higher by an astounding 87% than Rs6.35 billion reported in FY21.

The company's enhanced profitability can be ascribed to strong demand for its products, prompt raw material purchases, economies of scale, cost savings and a diverse customer base. The FY22 finance costs climbed to Rs2.65 billion from Rs1.58 billion in FY21, representing a 68% increase, as a result of rising borrowing costs and working capital needs. The company's earnings after taxes increased to Rs7 billion in FY22 from Rs3.2 billion in the previous year, showing a hefty growth of 115%.

During FY22, the earnings per share of the company stood at Rs323.45, more than doubling from Rs150.44 in FY21.

About the company

Sapphire Textile Mills was incorporated in Pakistan on March 11, 1969 as a public limited company under the Companies Act, 1913 (now the Companies Act, 2017). The company produces and sells yarn, fabrics and home textile products.

Credit: Independent News Pakistan-WealthPk