BATA swings into the red

May 25, 2026 (MLN): Bata Pakistan Limited (PSX: BATA) reported a severe financial downturn for the first quarter ended March 31, 2026, swinging into the red with a net loss of Rs149.35m compared to a net profit of Rs247.98m in the corresponding period last year.

Reflecting this sharp bottom-line contraction, the company's earnings per share (EPS) swung from a positive Rs32.80 in Q1 2025 to a loss per share of Rs19.76 in 2026.

The primary catalyst for this negative turnaround was soaring production costs that heavily squeezed margins. While BATA's net sales managed a healthy 9% year-on-year increase, rising to Rs5.74bn from Rs5.28bn, the cost of sales spiked at an alarming rate of 32%, settling at Rs3.33bn.

Because direct costs vastly outpaced revenue growth, the company’s gross profit contracted by 13%, falling to Rs2.40bn compared to Rs2.75bn in the prior year.

On the operational front, the company kept its overheads relatively contained. Overall operating expenses grew by just 2% to Rs2.23bn, driven by flat distribution costs (up 1%) and a 12% rise in administrative expenses, which were partially offset by a 55% drop in other expenses. Additionally, BATA saw a 146% jump in "other income," which brought in Rs41.22m. However, these mitigating factors were not enough to absorb the initial gross margin shock, causing the operating profit to plummet by 62% to Rs220.15m.

Below the operating line, the company found slight relief as finance costs dropped by 12% to Rs172.87m. After accounting for a newly booked levy-minimum tax of Rs20.81m, the profit before income tax collapsed by 93% to a mere Rs26.47m.

The final, devastating blow to BATA’s bottom line came from its tax obligations. Despite the 93% plunge in pre-tax profits, the company booked a 28% higher income tax expense of Rs175.82m (up from Rs137.83m last year). This disproportionately heavy tax burden completely wiped out the remaining pre-tax earnings, forcing Bata Pakistan Limited to close the quarter with a final net loss of Rs149.35m.

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