For Nishat Textile Mills (NML), the pain was manageable even during the toughest times when the rest of the textile sector was hung out to bleed. But now that the swelling demand for yarn and value-added made-ups from international markets has acted like the proverbial salve for the sectors wounds, the textile giant is back with quite a resounding bang.
FY13 on the whole saw a sharp hike in profitability for the entire sector-primarily attributable to recuperating core operations led by improved cotton-yarn spreads. For Nishat, Pakistans largest composite textile business, this resulted in significant improvement in volumetric sales and higher exports.
The depreciation of the rupee against the greenback also helped unwind the revenue, consequently the firms weaving and spinning segments did bumper business, shipping out record amounts of Greige, fine count yarn, and processed cloth to China, Europe and Hong Kong. While the complete numbers are not out yet, analysts report that there are pertinent indications that export related orders made up for almost 75 percent of the entire top line for Nishat textiles this year.
Moreover, gross margins for the company during FY13 also expanded handsomely- going up by 2 ppt during the year. One reason being cited for healthier spreads is Nishats ongoing drive to achieve improved cost efficiencies.
But, easier availability of cotton in the domestic market during the glut season in FY13 was an even bigger factor. Not only did it allow a majority of the millers to stock up on the finer quality at highly competitive prices, but also a subsequent uptick in yarn prices in the international market helped boost the spreads quite generously, allowing the larger players like Nishat to play on the economies of scale.
Additionally, the financial charges of the Company also saw a decline-going down by 8 percent year on year mainly due to a favourable interest rate scenario. This, coupled with significant growth in corporate earnings flowing in from Nishats subsidiaries helped the firms bottom line immensely.
Going forward, however, Nishat-like other composite players-might not be able to enjoy some of the perks that they did last year.
Prices of cotton in the domestic markets are expected to remain tight during the crucial upcoming procurement period (November) and while demand for yarn from China will remain steady, higher competition from India and lower international cotton prices may reduce some of the cotton-yarn spreads for domestic spinners.
But the firm is reportedly engaged in significant capacity expansion projects which will allow it to tap into the upcoming wave of demand within the higher value-added segment: namely for processed cloth and textiles which are expected to see a surge in the upcoming months. With the entire industry-including Nishat-firmly pinning their hopes on the GSP+ status, the upcoming year is going to be interesting to say the least!
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NISHAT MILLS LIMITED
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(Rs mn) FY12 FY13 chg
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Net sales 44,924 52,426 17%
Gross profit 6,789 9,044 33%
Gross margins 15% 17% 2 ppt
Profit from operations 5,842 7,974 36%
Finance cost 1,760 1,618 -8%
NPAT 3,529 5,847 66%
EPS (Rs0 10.04 16.63 66%
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Source: KSE notice
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Other corporate results
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KARAM CERAMICS LIMITED
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Rs (mn) FY13 FY12 Chg
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Sales - net 1156 1187 -3%
Cost of sales 1042 1081 -4%
Gross profit 114 107 6%
Other operating income 0.2 0.3 -26%
Profit before tax 17 3 407%
Profit after tax 4.4 0.7 554%
EPS (Rs) - basic 0.30 0.05
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Source: KSE notice
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SHEZAN INTERNATIONAL LIMITED
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Rs (mn) FY13 FY12 Chg
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Sales 5675 5061 12%
Cost of sales 3964 3603 10%
Gross profit 1711 1458 17%
Other operating income -37 -38 -1%
Operating profit 440 371 19%
Profit before tax 394 318 24%
Profit after tax 249 207 20%
EPS (Rs) - basic 37.78 31.42
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Source: KSE notice
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ORIX LEASING PAKISTAN LIMITED
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Rs (mn) FY13 FY12 Chg
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Finance lease and installment loans 1900 2013 -6%
Operating leases 850 717 19%
Mark-up on term / factoring finance 396 234 69%
Other income 414 385 8%
Profit before tax 414 275 51%
Profit after tax 337 202 67%
EPS (Rs) - basic 4.11 2.46
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Source: KSE notice
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MAPLE LEAF CEMENT FACTORY LIMITED
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Rs (mn) FY13 FY12 Chg
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Sales - net 17357 15461 12%
Cost of sales 11312 11447 -1%
Gross profit 6045 4015 51%
Other operating income 41 34 21%
Operating profit 4857 2795 74%
Profit before tax 3163 444 612%
Profit after tax 3225 496 549.89%
EPS (Rs) - basic 6.11 0.83
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Source: KSE notice
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PREMIUM TEXTILE MILLS LIMITED
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Rs (mn) FY13 FY12 Chg
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Sales net 4932 4136 19%
Cost of sales 4124 3678 12%
Gross profit 808 458 76%
Operating profit / (loss) 690 374 84%
Profit before tax 508 240 112%
Profit after tax 493 194 154%
EPS (Rs) - basic 80.03 31.50
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Source: KSE notice
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