Nadeem Textile Mills Limited: performance and outlook

Nadeem Textile Mills Limited (PSX: NATM) was incorporated in Pakistan as a public limited company in 1984. The company is engaged in the manufacturing and sale of yarn.

Pattern of Shareholding

As of June 30, 2024, NATM has a total of 21.267 million shares outstanding which are held by 41 shareholders. Directors, CEO, their spouse and minor children have the majority stake of 81.95 percent in the company while 7.21 percent shares are held by local general public. The remaining shares are held by other categories of shareholders.

Financial Performance (2021-25)

During the period under consideration, NATM’s topline and bottomline slid twice i.e. in 2023 and 2025. The company has been registering net loss since 2023. NATM’s margins which fell in 2020 rebounded in 2021 and 2022 followed by a slump in the subsequent years. NATM’s margins hit their lowest ebb in 2025. The detailed performance review of the period under consideration is given below.

In 2021, NATM’s saw significant improvement of 39.77 percent in its topline which was recorded at Rs. 9494.36 million. However, this mainly came on the back of upward revision in selling prices during the year. During the year, NATM’s installed capacity increased to 26.491 million kilograms from 22.639 million kilograms in the previous year.

The company attained capacity utilization of 96.52 percent in 2021. Purchase of raw materials at cheaper rates resulted in 116.49 percent higher gross profit recorded by the company in 2021 with GP margin climbing up to 13.98 percent from 9 percent in the previous year.

Administrative expense multiplied by 15.14 percent in 2021 mainly on account of elevated payroll expense despite the fact that number of employees reduced to 1190 in 2021.

Distribution expense mounted by a massive 118 percent in 2021 due to higher freight & octroi as well as ocean freight charges incurred during the year. 32.11 percent higher other expense incurred by NATM in 2021 was the effect of increased profit related provisioning as well as provision booked for slowing moving stores and spares and ECL.

Higher profit on saving accounts, gain on sale of fixed assets, exchange gain as well as bad debts recovered during the year pushed up other income by 72.75 percent in 2021. As a consequence, operating profit multiplied by 151.11 percent in 2021 with OP margin mounting to 10.78 percent from 6 percent in 2020. Monetary easing as well as lower outstanding short-term borrowings resulted in 12.14 percent curtailed finance cost in 2021. Net profit posted a phenomenal 3541.32 percent rise to clock in at Rs.638.87 million with EPS of Rs.30.78 and NP margin of 6.73 percent. This was against the EPS of Rs.0.91 and NP margin of 0.26 percent posted in 2020.

The growth trajectory continued in 2022 with topline posting 45.10 percent enhancement to clock in at Rs.13,775.87 million. Just like the previous year, the growth in net sales was largely driven by higher prices. Installed capacity further increased to 28.304 million kilograms while capacity utilization stood at 96.71 percent.

Upward price revision and increasing proportion of export sales in the total sales mix of NATM culminated into 74.67 percent higher gross profit with GP margin attaining its highest level of 16.83 percent. Administrative expense swelled by 19 percent in 2022 due to increased salaries, depreciation and motor vehicle expense incurred during the year. Workforce was squeezed to 1165 employees in 2022.

Distribution expense escalated by 59.97 percent in 2022 due to hefty commission paid on local sales followed by export commission and ocean freight. During the year, NATM booked higher provision for WWF, WPPF and ECL which combined with exchange loss resulted in 97.40 percent higher other expense. Other income nosedived by 37.15 percent in 2022 as there was no exchange gain and gain on sale of fixed assets recorded in 2022.

NATM registered 78.89 percent higher operating profit in 2022 with OP margin recording its highest level of 13.29 percent. Monetary tightening as well as elevated long-term and short-term borrowings resulted in 68 percent higher finance cost in 2022. Net profit expanded by 90 percent in 2022 to clock in at Rs.1213.98 million with EPS of Rs.56.43 and NP margin of 8.81 percent.

After two years of sustained topline and bottomline growth, NATM posted 22.57 percent lower net sales to the tune of Rs.10,666.65 million in 2023. This was on account of shrunken demand due to high inflation in the home market as well as global recession.

Production reduced by 28.94 percent to clock in at 19.450 million kilograms. This translated into capacity utilization of 68.72 percent – the lowest among the period under consideration. Lower absorption of fixed cost resulted in 78 percent thinner gross profit in 2023 with GP margin lowering down to 4.78 percent.

Unprecedented level of inflation kept driving up the administrative expense which swelled up by 22.31 percent in 2023 despite workforce rationalization which resulted in 1145 number of employees in 2023. Lower sales volume resulted in 20.62 percent thinner distribution expense in 2023. Other expense also narrowed down by 11.24 percent in 2023 despite hefty exchange loss and provision for ECL as the company didn’t book any profit related provisioning during 2023.

Other income posted 161.50 percent enhancement in 2023 due to improved profit on saving accounts and TDRs as well as gain recorded on the sale of fixed assets. Operating profit contracted by 95.66 percent in 2023 with OP margin standing at 0.74 percent. Finance cost hiked by 48.71 percent in 2023 due to higher discount rate and elevated borrowings. This resulted in net loss of Rs.569.29 million in 2023 with loss per share of Rs.26.39.

In 2024, NATM posted 6.79 percent year-on-year growth in its topline which clocked in at Rs.11,391.09 million. The company recorded capacity utilization of 70.50 percent which culminated into production of 19.834 million kilograms of yarn in 2024.

High cost of sales particularly elevated energy tariff and other input and conversion charges pushed down gross profit by 87.13 percent in 2024 with GP margin moving down to its lowest level of 0.58 percent. Administrative expense inched up by 6.20 percent in 2024 due to higher payroll expense. This was despite the fact that the company streamlined its workforce from 1145 employees in 2024 to 1095 employees in 2025. Selling expense slid by 2.96 percent in 2024 due to lower ocean freight charges, lesser sales commission and a downtick recorded in export development surcharge. 85.28 percent lower other expense incurred by NATM in 2024 was due to no exchange loss realized as well as considerably lesser provisioning booked for ECL.

Other income mounted by 119.49 percent in 2024 due to exchange gain realized as well as reversal of provision booked for ECL. Profit recorded on TDRs also contributed in pushing other income up in 2024.

NATM recorded operating loss of Rs.218.32 million in 2024. Finance cost ticked up by 1.96 percent in 2024 due to higher discount rate. This was despite the fact that the company had lower outstanding borrowings in 2024 vis-à-vis last year. NATM’s net loss magnified by 68.94 percent to clock in at Rs.961.78 million in 2024. This translated into loss per share of Rs.45.22 in 2024.

In 2025, NATM recorded 57 percent thinner topline to the tune of Rs.4893.18 million. Both local and indirect export sales drastically plunged while no direct export sales were recorded during the year. This was not only because of reduced demand in local and international markets but also because of the fact that the company operated its plant at a lower capacity in the wake of macroeconomic challenges particularly elevated energy cost and cotton crop crisis which drove up the cost of production. In 2025, the company not only reduced its installed capacity from 28.13 million kgs to 17.94 million kgs but also utilized only 51.41 percent of its installed capacity versus 70.50 percent capacity utilization recorded in 2024.

NATM recorded gross loss of Rs.527.18 million in 2025. Curtailed operations resulted in 9.18 percent downtick recorded in administrative expense in 2025. This was also because NATM rationalized its workforce from 1575 employees in 2024 to 606 employees in 2025.

Distribution expense also dwindled by 51.36 percent in 2025 due to thinner sales volume which squeezed the sales commission and freight expense. Other income deteriorated by 53.14 percent in 2025 as no exchange gain was realized during the year. Interest income also slid in 2025 due to monetary easing.

Moreover, there was considerably lesser reversal of provisioning done for ECL in 2025. Conversely, other expense surged by 93.27 percent in 2025 due to loss incurred on the disposal of fixed assets and spare parts as well as greater provisioning done for ECL. NATM recorded operating loss of Rs.770.47 million in 2025, up 252.91 percent year-on-year.

Discount rate cuts as well as lower outstanding borrowings resulted in 25 percent lower finance cost in 2025. The company net loss was recorded at Rs.1190.94 million in 2025, up 23.83 percent year-on-year. Loss per share also elevated to Rs.56 in 2025.

Recent Performance (9MFY26)

During the nine-month period of the ongoing fiscal year, NATM posted 61.22 percent year-on-year decline in its net sales which clocked in at Rs.1691.12 million. Both local and export sales of the company dipped during the period on the back of economic slowdown, pricing pressure, poor availability of quality cotton and elevated electricity and gas tariffs.

In the face of all the external pressures, the company’s diligent efforts to improve its operational efficiency enabled it to cut down its cost by 59.38 percent in 9MFY26. This resulted in 21.76 percent thinner gross loss to the tune of Rs.167.09 million recorded in 9MFY26.

Administrative and distribution expenses tumbled by 9.18 percent and 53.27 percent in 9MFY26 due to curtailed operations and lower sales. No other income was recorded during the period.

Conversely other expense of Rs.16.45 million was recorded during the period which apparently signifies loss incurred on the disposal of operating fixed assets. Operating loss tapered off by 17.93 percent to clock in at Rs.334.40 million in 9MFY26. Lower short-term borrowings as well as monetary easing squeezed the finance cost by 41 percent in 9MFY26.

NATM posted net loss of Rs.604.108 million in 9MFY26, down 6.88 percent year-on-year. This translated into loss per share of Rs.28.41 in 9MFY26 versus loss per share of Rs.30.50 recorded in 9MFY25.

Future Outlook

The company is actively seeking for ways to reduce its energy cost by installing a solar unit. NATM also plans to install open-end spinning machinery to increase its operational efficiency and minimize its production expenses.

Copyright Business Recorder, 2026