Nishat Mills’ troublesome 3Q

The textile powerhouse, Nishat Mills Limited (PSX: NML) is losing profitability; for the nine months ended FY17, despite managing a three percent growth in its top line year-on-year, the company’s gross profit was lower by 15 percent, while the bottom-line declined by 13 percent. Most of this is due to the third quarter itself.

Nishat Mills’ 3Q was wrought with a significantly higher distribution cost (up 24%) and lower other income (down 32%); the net profit for the quarter was almost half of what it was a year ago. Up until now, the company’s significant other income had been showing growth in the bottom-line.

As per the half-year Director’s Report, Nishat Mills’ profitability has been suffering due to a rise in minimum wage, fuel costs, and raw material prices. Moreover, the company had been receiving lower rates from its weaving, dyeing, and home textile segments. The core issues in textile remain, as the export package seems to have had little effect on the textile industry.