Ayesha Mudassar

Interloop Limited (ILP), one of Pakistan’s leading textile exporters, reported a significant 96% decline in net profit for the first quarter of the ongoing fiscal year 2024-25, primarily due to a combination of factors such as higher sales costs, foreign exchange losses and increased working capital requirements, according to WealthPK.

According to the results available from the Pakistan Stock Exchange (PSX), the company reported a 39% year-on-year (YoY) decrease in gross profit, reaching Rs7.7 billion. Profit-before-tax also saw a drastic reduction of 95% to Rs299.9 million, while net profit plummeted by 96%, totalling Rs222.2 million. On a positive note, the company recorded sales of Rs41.6 billion for 1QFY25 compared to Rs38.5 billion in 1QFY24, reflecting an 8% increase. This growth in sales highlights the effectiveness of ILP’s strategic initiatives, including timely investments and capitalising opportunities in both export and domestic markets.

However, the cost of sales rose by 32%, driven by factors such as rising material costs, higher energy expenses, and an uptick in minimum wages. Established in 1992 and listed on the Pakistan Stock Exchange in 2019, Interloop is a vertically integrated, multi-category manufacturer of hosiery, denim, knitted apparel and activewear. It also produces yarn for textile customers. As of June 30, 2024, Interloop Limited had 1.4 billion shares distributed among 7,268 shareholders.

The company’s directors held a majority stake of 71.9 %, followed by the local general public, which possessed 18.9% of the company’s ownership. Approximately 2.9% of shares were owned by modarabas & mutual funds, while foreign companies held a 2.2% stake. Banks, Development Financial Institutions (DFIs), and Non-Banking Financial Institutions (NBFIs) accounted for 1.5% of ILP shares. The remaining ownership was held by other categories of shareholders, including insurance companies and the foreign general public.

Performance in FY24

ILP experienced remarkable growth in its sales in FY24 as the company achieved a record-high sales revenue of Rs156.1 billion, up from Rs119.2 billion in FY23. Despite this impressive top-line growth, the company reported a profit-after-tax of Rs15.7 billion for FY24, reflecting a 22% decline compared to Rs20.1 billion in FY23. This decrease in profitability was largely driven by high distribution costs and increased administrative expenses, resulting in earnings per share of Rs11.25 in FY24 compared to Rs14.39 in FY23.

The textile sector in Pakistan experienced challenging times in FY24, primarily due to reduced demand in key markets such as the USA and Europe. The industry has also been impacted by various issues, including rising raw material costs, high energy prices, elevated bank financing rates, and delays in sales tax refunds. These factors have collectively undermined profitability and negatively affected the overall performance of the sector.

Credit: INP-WealthPk