Karachi: Systems Limited (SYS) has reported a significant rise in its third-quarter earnings for 2025, with a consolidated profit after tax of Rs2.8 billion, equivalent to earnings per share (EPS) of Rs1.90. This marks a 28% increase compared to the same period last year and a 5% rise from the previous quarter.
The company's improved earnings are largely attributed to a rise in gross margins, which have increased to 29.7% in 3Q2025 from 25.3% in 3Q2024. This growth is supported by enhanced operational efficiency. For the first nine months of 2025, gross margins reached 26.9%, up from 24.0% in the corresponding period of 2024.
Systems Limited also experienced a 20% year-on-year growth in revenue during the third quarter, likely reflecting a sustained increase in IT exports, which rose by 25%.
Gross margins saw an upturn across all regions, with notable improvements in Pakistan, the Middle East, Europe, North America, and the Asia Pacific. Pakistan's gross margins reached 19% compared to 7% in the same quarter last year, while the Asia Pacific region saw an increase to 42% from 36%.
The first nine months of 2025 also recorded regional revenue growth, with Pakistan leading at a 39% increase year-on-year. Europe, Asia Pacific, the Middle East, and North America followed with growth rates of 22%, 19%, 18%, and 8%, respectively.
However, the company faced an exchange loss of Rs249.5 million due to the appreciation of the Pakistani Rupee against the U.S. Dollar, from Rs282.76 to Rs281.32.
Distribution costs rose by 54% year-on-year to Rs769 million in the third quarter of 2025, reflecting the company's aggressive growth strategy across all markets.
The effective tax rate for the third quarter of 2025 stood at 11%, down from 13% in the third quarter of 2024. For the first nine months of 2025, the tax rate was 10%, compared to 13% in the same period of 2024.
Investment analysts from JS Global maintain a 'BUY' stance on Systems Limited, noting that the company is currently trading at a 2025 estimated price-to-earnings (PE) ratio of 21.1x, with a forecast of 15.7x for 2026.