Karachi, Nishat Mills Limited (NML) reported an unconsolidated loss of PKR 286 million in the third quarter of fiscal year 2024, marking a significant downturn from a net profit of PKR 1.1 billion in the previous quarter. The loss is attributed primarily to reduced gross margins and heightened financial charges.

According to AKD Securities Limited, the textile giant experienced a gross margin contraction to 8.9% from 11.8% in the preceding quarter, impacted by rising raw material costs, notably a 17% quarter-over-quarter increase in local cotton prices, and the appreciation of the domestic currency. The company's financial charges also rose by 10% due to higher short-term borrowings, reaching PKR 57 billion in December 2023 from PKR 44 billion in September 2023.

Despite these challenges, NML's revenue for the quarter reached PKR 43.3 billion, a 17% increase from the previous quarter, driven by growth in both export and local sales. However, other income fell by 8% to PKR 2.4 billion, affected by lower exchange gains and a slight decline in average KIBOR rates which influenced interest income. Distribution expenses were up by 26% to PKR 1.9 billion, correlating with higher sales volumes.

For the nine months of FY24, NML's earnings per share stood at PKR 15.2, compared to PKR 31.7 in the same period last year, reflecting the overall impact of decreased gross margins and increased financial charges on the company’s profitability.