Lahore: Nishat Mills Limited (NML) hosted a corporate briefing addressing its financial performance for fiscal year 2024, revealing a 30% year-over-year decline in consolidated net earnings to Rs22.38 per share. The company's standalone earnings were reduced by nearly half, landing at Rs18.11 per share, with core textile operations contributing to the losses. The first quarter of fiscal year 2025 saw an additional 34% decrease in earnings per share compared to the previous year, primarily due to sustained challenges in the textile sector.
According to JS Global, the management attributed the four percentage point decrease in the textile business' gross margins to elevated energy costs, currency appreciation, and intensified competition, especially in the dyeing sector. Despite these setbacks, the company reported an 87% year-over-year growth in dividend income from its associated companies, totaling Rs3.45 billion. MCB Bank accounted for 37% of this income, with power companies PKGP, LPL, and NPL contributing a combined 61%.
The company outlined its strategic response to rising domestic gas prices, highlighting an alternate fuel facility for its captive power plants, including options such as RLNG, FO, Coal, and Solar. The company plans to increase its solar capacity from 20MW to 33MW within a month. The management expressed confidence that the disconnection of gas supply in January 2025 would not affect operations. Additionally, the impact of the winter package for grid-supplied power is expected to be minimal due to its limited applicability.
Amid regional challenges, NML anticipates benefiting from displaced orders from Bangladesh and China in the garments segment, although high energy costs remain a competitive hurdle. The management also addressed the termination of independent power producer (IPP) contracts, indicating that future investment plans depend on governmental clarity regarding overdue receivables.
The company announced shareholder approval to divest its entire stake in Nishat Hospitality, valued at Rs1.7 billion. Looking forward, NML aims to improve its earnings outlook through growth in spinning, work-wear, and denim segments, strategic raw cotton procurement, expanded solar capacity, increased denim exports, and the development of marketing offices in key international markets.