Ayesha Mudassar

Yousaf

Weaving Mills Limited (YOUW) reported a net loss of Rs40.2 million during the nine months of the Fiscal Year 2024 compared to a net loss of Rs7.9 million in the corresponding period of last year, reports WealthPK.

The company recorded a loss before tax of Rs36.8 million during 9MFY24 compared to a loss of Rs1.2 million in 9MFY23. Additionally, the gross profit plunged by 90% during the period under review.

The textile company witnessed a prominent 63% decline in net sales, reaching Rs270.3 million against Rs729.1 million in 9MFY23. The company’s management actively pursued cost-saving measures to mitigate losses. However, certain factors, including exorbitant input prices, escalating energy charges, currency exchange rate fluctuations, and uncertain political and economic conditions, predominantly impacted the company’s performance.

Quarterly Review

The textile company posted a net loss of Rs10.6 million for the third quarter ending March 31, 2024, compared to a loss of Rs8.9 million in the corresponding period of last year.

The quarterly report indicates that the company incurred a loss before tax of Rs9.5 million in 3QFY24 compared to a loss of Rs3.4 million in 3QFY23. A notable decline in net sales was observed, with a 79% reduction compared to the previous year. Furthermore, the cost of sales fell by 78% during the 3QFY24.

Performance over the last four years (2020-2023)

During the years under review, YOUW’s top line and bottom line plunged once, i.e. in 2023. Furthermore, the gross and pre-tax profit margins improved in 2020, and 2021, and then tumbled in 2023. Historical analysis of the company’s sales reveals an increasing trend until 2022. The company posted the highest four-year sales in FY22 of Rs 1.2 billion. However, a sharp increase in the production costs – driven by higher interest rates and unprecedented inflation – resulted in a 31% decline in net sales during 2023.

The company’s net profit performance has varied significantly over the years. In the last four years (2020-2023), the firm achieved its highest profit of Rs22.3 million in FY22. However, due to uncertain political and economic conditions, the company incurred a loss of Rs66.4 million in FY23. Additionally, both gross loss and loss-before-tax have shown considerable fluctuations during the year. The company’s profitability in FY23 was adversely affected by strict monetary measures, discriminatory tax policies, and other prevailing economic challenges.

Company description

Yousaf Weaving Mills Limited was incorporated on January 17, 1988, as a public limited company in Pakistan under the Companies Ordinance of 1984 (now the Companies Act, 2017). The company is engaged in the business of textile weaving, spinning, and sale of processed fabric.

Future prospects

Global economic uncertainty and escalating production costs have eroded the global competitiveness of Pakistan’s textile industry. Additionally, frequent energy shortages and power outages have disrupted production schedules, affecting delivery timelines and undermining customer trust. Amidst a continuously challenging economic landscape, the textile composite is determined to collaborate with the relevant departments to overcome these challenges, strengthen its market presence, and explore new growth opportunities.

Credit: INP-WealthPk