Nishat Mills Limited

Pakistan’s largest textile composite, Nishat Mills Limited (PSX: NML) released its result for FY17 recently which saw the company persisting in the face of a tough environment for the overall textile value chain in the past year.

The top-line of the company grew at a moderate 3 percent on a year-on-year basis and growth came from higher margin product mix. NML has been diversifying its product mix and has developed new market linkages as well. The company expects its new denim garments segment to augment its top-line.

However, other segments such as the weaving segment have not fared so well this year because of the decline in prices due to oversupply of fabric in the local market. There has been low demand in the export market due to a number of factors including a depreciation of the euro and pound and a rising cost of production for Pakistani exporters.

NML plans to manufacture more technical and industrial fabric variants such as polyester and viscose, to continue to diversify its product range. The spinning division also showed lacklustre performance on account of low yarn prices but high cotton cost.

The company has also increased production capacity of its home textile division by 20 percent and boasts of a higher number of digital printing machines. NML has also installed a new wider width washing plant enabling it to increase production capacity of reactive dyed and printed fabric.

Overall, the textile giant’s gross profit dipped by 14 percent on a year-on-year basis on account of a higher cost of production. There was a marginal increase in other income owing to higher dividend income from subsidiaries. NML took advantage of the low interest rate environment as well as lower borrowings which slashed the finance cost by 13 percent as compared to FY16.

The company’s PAT decreased by 13 percent while it announced a final cash dividend of Rs5 per share for the year. The future outlook for the company looks promising on account of exploration of new markets in China while enhancing its existing export base in Europe and other established markets. There is also new textile export package in the offing which might provide a much needed conducive environment that includes a decrease in the cost of doing business for the sector.