Leather Up Limited (PSX: LEUL) was incorporated as a private limited company in 1990 and was converted into a public limited company in 1993. The principal activity of the company is the manufacturing and export of leather bags and leather garment products.
Pattern of Shareholding
As of June 30, 2025, LEUL has a total of 6 million shares outstanding which are held by 1369 shareholders. Directors, CEO, their spouse and minor children have the majority stake of around 50 percent in the company followed by local general public holding 49.88 percent shares of LEUL. The remaining shares are held by Investment Corporation of Pakistan and joint stock companies.
Performance Trail (2019-25)
LEUL’s topline which had been shrinking until 2021 posted a staggering rebound in 2022. In the next two years, the topline registered paltry growth followed by a drastic fall in 2025. The company posted net profit only in 2024. Gross margin rode an upward trajectory until 2020 followed by a radical drop in 2021.
In 2022, the company’s gross margin attained significant growth followed by a slump in 2023. In 2024, LEUL’s gross margin attained its optimum level followed by a decline in 2025. The operating and net margins of LEUL stayed in the negative zone over the period under consideration except 2024 where the company posted a positive net margin. The detailed performance review of the period under consideration is given below.
In 2019, LEUL’s topline slid by 7.12 percent year-on-year to clock in at Rs.48.02 million. This was due to the cyclical nature of fashion industry as well as loss of priority of leather garments in the international market. The company curtailed its production to match the demand level which resulted in 9.47 percent year-on-year fall in the cost of sales.
This culminated into 71.8 percent year-on-year jump in gross profit. GP margin also improved from 2.89 percent in 2018 to 5.35 percent in 2019. Low export sales translated into low freight and handling charges which pushed the distribution expense down by 13.30 percent year-on-year in 2019. Administrative expense increased by around 1.41 percent year-on-year due to higher fee & subscription charges incurred during the year.
The company posted operating loss of Rs.5.10 million in 2019, down 22 percent year-on-year. The company’s capital structure is equity oriented with debt-to-equity ratio of 13.2 percent in 2019.
While finance cost increased by 118.76 percent in 2019, it majorly comprised of bank charges and commissions. Other income also posted 99.61 percent drop in 2019 due to high-base effect as the company realized gain on the sale of land in 2018. LEUL posted net loss of Rs.8.20 million in 2019 with loss per share of Rs.1.37 as against net profit of Rs.45.23 million and EPS of Rs.7.54 recorded in 2018.
In 2020, LEUL’s topline drastically fell by 42.88 percent year-on-year to clock in at Rs. 27.42 million. This was on the back of low demand. The associated reduction in the capacity utilization from 19 percent in 2019 to 10 percent in 2020 pushed the cost of sales down by 43.50 percent year-on-year.
While gross profit also slipped by 31.98 percent in 2020, GP margin ticked up to 6.37 percent. Significant reduction in advertising and sales promotion as well as lower freight and handling charges resulted in 74.78 percent year-on-year dip in distribution expense. Administrative expense also nosedived by 33.95 percent year-on-year on account of lesser fee and subscription charges, lesser utility expense as well as lesser salaries expense due to reduction in the human resource count from 38 in 2019 to 26 in 2020.
The operating loss further shrank by 57.60 percent to clock in at Rs.2.16 million 2020. Finance cost fell by 92.78 percent year-on-year in 2020 due to reduction in bank charges and commission. The company had no outstanding long-term and short-term loans in 2020, hence, no markup/interest charges.
Other income considerably improved during the year due to reimbursement of penalty as well as PM package for the business community. LEUL’s net loss shrank by 89.50 percent year-on-year in 2020 to clock in at Rs.0.86 million with loss per share of Rs.0.14.
LEUL posted further 38.15 percent year-on-year plunge in its revenue which clocked in at Rs.16.96 million in 2021. The company reduced the number of its industrial sewing machines from 195 to 57 and utilized 21 percent of the installed capacity. Cost of sales also declined by 33.97 percent year-on-year in 2021 resulting in 99.55 percent drop in gross profit.
GP margin fell to its lowest level of 0.05 percent in 2021. Administrative expense surged by 129.33 percent in 2021 due to hefty growth in fees and subscription charges, auditor’s remuneration as well as entertainment and utilities expense during the year. Distribution expense also grew by 34.10 percent year-on-year on the back of elevated freight, handling and insurance charges incurred in 2021.
The result was 282.86 percent year-on-year growth in operating loss which stood at Rs.8.28 million in 2021. The company also incurred other expense of Rs.50.22 million in 2021 as against the other income of Rs.1.79 million in the previous year.
Other expense was mainly on account of raw material written off during the year as the company’s inventory was completely destroyed due to flooding of mill area because of heavy rainfall. Consequently, net loss magnified by 6721.33 percent in 2021 to clock in at Rs.58.68 million. Loss per share amounted to Rs.9.78 in 2021.
After constant shrinkage since 2017, LEUL’s posted 58.90 percent year-on-year rise in its topline which clocked in at Rs.26.95 million in 2022. This was because the company was able to increase its export sales. Cost of sales grew by 23.66 percent during the year.
Gross profit boasted a staggering growth of 75458 percent in 2022 with GP margin jumping up to 22.22 percent. Distribution expense remained intact in 2022 while administrative expense inched up by 5.14 percent due to rising inflation. The company wasn’t able to post operating profit even in 2022, however, the magnitude of operating loss greatly reduced by 67.63 percent to clock in at Rs.2.68 million.
Other expense shrank by 76.95 percent during 2022 due to the fact that the company sold the remaining spoiled inventory (because of rainfall) to one of its suppliers at less than cost price. Net loss dwindled by 75.32 percent year-on-year to clock in at Rs.14.48 million in 2022 with loss per share of Rs.2.41.
LEUL’s topline could muster a paltry 0.76 percent year-on-year growth to clock in at Rs.27.16 million in 2023. As the main export market of LEUL is Central Europe which was suffering from recession, the company faced demand destruction in 2023. Cost of sales hiked by 22.36 percent as the company disposed off some of its inventory as scrap in 2022 which provided low-base for 2023.
Gross profit slid by 74.85 percent year-on-year in 2023 with GP margin falling down to 5.55 percent. Administrative expense dropped by 12.19 percent in 2023 due to high-base effect as the company wrote off advances to employees and also booked provision for ECL in 2022. Distribution expense mounted by 25.08 percent in 2023 due to elevated freight, handling and distribution charges incurred during the year despite low demand.
LEUL registered operating loss of Rs.6.46 million in 2023, up 141 percent year-on-year. The company registered other income of Rs.3.54 million in 2023 versus other expense of Rs.11.58 million in 2022.
This was on account of the fact that LEUL had written off its raw materials and also booked provision for finished goods in the previous year. Conversely, in 2023, the company reversed the provision for finished goods and also wrote back advances from customers. LEUL posted net loss of Rs.3.287 million in 2023, down 77.30 percent year-on-year with loss per share of Rs.0.55.
In 2024, LEUL posted 1.36 percent uptick in its net sales which clocked in at Rs.27.53 million. Demand from Europe remained weak on account of high inflation. Cost of sales declined by 17.16 percent in 2024 due to massive drop in cutting & stitching charges. This resulted in 316.77 percent improvement in gross profit with GP margin climbing up to 22.80 percent.
Administrative expense slid by 25.23 percent in 2024 due to lower payroll expense and considerably lesser trade & other receivables written off during the year. Distribution expense surged by 8.81 percent in 2024 due to higher freight, handling and insurance charges incurred during the year.
LEUL recorded operating loss of Rs.0.0908 million (Rs.90,822) in 2024, down 98.59 percent year-on-year. Other income contracted by 81.43 percent in 2024 due to thinner exchange gain, lesser advances from customers written back and lesser reversal of provision on finished goods recorded during the year. LEUL was able to post net profit of Rs.0.3217 million in 2024 with EPS of Rs.0.05 and NP margin of 1.17 percent.
LEUL recorded 56 percent year-on-year shrinkage in its net sales which clocked in at Rs.12.09 million in 2025. This was due to weaker demand from international markets particularly Europe due to recession. Local sales progressed during the year; however, due to its petite share in the overall sales mix, it couldn’t buttress the topline.
Disintegration of sales by products shows that the company only sold leather bags and jackets in 2025. Unlike 2024, no coats, pouches and wallets were sold during 2025. Resultantly, cost of sales tumbled by 48.77 percent in 2025.
The company recorded gross profit of Rs.1.20 million in 2025; down 80.88 percent year-on-year.GP margin fell to 9.93 percent in 2025. This was due to lower capacity utilization, higher prices of raw and packaging materials, changes in sales mix and competitive pricing pressure in key export markets.
Lower sales volume led to 69.42 percent dip in distribution expense in 2025. Conversely, administrative expense surged by 14.34 percent in 2025 due to higher payroll expense as well as repair & maintenance charges. LEUL recorded operating loss of Rs.4.99 million in 2025, up from operating loss of Rs.0.0908 million recorded in the previous year.
Other income ticked up by 1.74 percent in 2025. This was because higher exchange gain was offset by the absence of customer advances written back and reversal of provision on finished goods. LEUL posted net loss of Rs.4.5086 million in 2025 versus net profit of Rs.0.3217 million recorded in 2024. Loss per share stood at Rs.0.75 in 2025.
Recent Performance (1HFY26)
During the first half of the ongoing fiscal year, LEUL recorded 293.76 percent to clock in at Rs.24.478 million. This was on the back of a phenomenal rise in export sales during the period. No local sales were reported in 1HFY26. Cost of sales mounted by 247.17 percent in 1HFY26 due to a massive spike in raw and packing material charges as well as cutting and stitching charges incurred during the period.
LEUL posted 5402.67 percent improvement in its gross profit in 1HFY26 with GP margin clocking in at 12.63 percent versus GP margin of 0.90 percent recorded in 1HFY25. Stronger GP margin was due to the achievement of high value export orders during the period. Robust export sales culminated into 285.91 percent hike in distribution expense in 1HFY26.
Administrative expense ticked up by 8.45 percent in 1HFY26 apparently due to upward revision in minimum wage rate. Operating loss fell by 92.48 percent to clock in at Rs.0.191 million in 1HFY26. LEUL recorded other expense of Rs.0.091 million in 1HFY26 versus other income of Rs.0.369 million in 1HFY25.
This was likely due to no reversals of provision on finished goods and no advances written back in 1HFY26. Net loss plunged by 77.15 percent to clock in at Rs.0.50889 million in 1HFY26, down 77.15 percent year-on-year. This translated into loss per share of Rs.0.08 in 1HFY26 versus loss per share of Rs.0.37 recorded in 1HFY25.
Future Outlook
Operational efficiency, cost optimization and exploration of new markets led to the improvement of LEUL’s financial performance in 1HFY26. Joint ventures between Pakistani and Chinese leather manufacturers may enable the local companies to modernize and upgrade their production processes which will provide them competitive edge in the international market.