Gul Ahmed H1 earnings hit hard

February 27, 2026 (MLN): Gul Ahmed Textile Mills Limited (PSX: GATM) reported a steep decline in profitability for the half year ended December 31, 2025, posting a net profit of Rs50.70m a sharp 95.04% fall compared to the net profit of Rs1.02bn recorded in the same period last year.

The company's earnings per share (EPS) fell to Rs0.07, down from Rs1.38 in the corresponding period of the previous year, showing the significant compression in bottom-line returns.

The company generated net revenue of Rs85.49bn during the half-year, compared to Rs94.60bn in H1FY26, marked a 9.63% decline pointing to softer demand or pricing pressures in the textile sector.

Against this revenue, the cost of sales stood at Rs73.82bn, down 8.98% from Rs81.10bn last year.

Despite the reduction in input costs, the decline was not steep enough to offset the revenue drop, resulting in a gross profit of Rs11.67bn a 13.53% contraction from Rs13.50bn in the prior period.

Operating expenses presented a mixed picture. Selling and distribution costs remained broadly flat, edging up just 0.23% to Rs5.32bn from Rs5.31bn.

However, administrative costs rose notably by 22.47% to Rs3.86bn from Rs3.15bn, adding pressure to margins.

Offering some relief, other operating costs collapsed by 94.91% to just Rs16.48m from Rs323.88m in the prior period.

Finance costs, while still substantial, eased by 25.16% to Rs3.24bn from Rs4.32bn a meaningful improvement that partially cushioned the operating profit decline.

Despite this, operating profit fell 38.85% to Rs3.59bn from Rs5.86bn a year ago.

Other income saw a marginal 3.33% decline, coming in at Rs1.12bn compared to Rs1.16bn last year, offering limited offset to the broader profitability squeeze.

After accounting for levies of Rs548.55m down 31.60% from Rs801.96m the company reported a loss before income tax of Rs198.75m, compared to a pre-tax profit of Rs738.09m in the prior year.

A net taxation credit of Rs249.44m, compared to a taxation charge of Rs283.48m last year, ultimately rescued the bottom line, allowing GATM to close the half-year with a marginal net profit of Rs50.70m.

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