ZAL profit skyrockets 3.5x in 1HFY26

February 26, 2026 (MLN): Zarea Limited (PSX:ZAL) reported a massive surge in net profit to Rs1.13bn for the half year ended December 31, 2025, a 3.5 times increase from the Rs324.43m profit recorded in the same period last year.

The company's earnings per share jumped to Rs4.31 from Rs1.62 in the corresponding period of the previous year.

The company's top-line witnessed explosive growth, with revenue increasing 3.45 times year-on-year to Rs1.27bn from Rs366.77m.

However, the cost of sales spiked at an even faster pace, jumping 6.46 times to Rs885.26m from Rs136.99m.

Despite this sharply higher cost base, the sheer volume of revenue growth pushed gross profit up 66% to Rs381.65m from Rs229.78m in the prior period.

Consequently, the gross profit margin contracted significantly to 30.1% from 62.6% in H1 FY2025, reflecting a higher cost of doing business and direct costs absorbing a much larger chunk of revenue.

Remarkably, the net profit margin still expanded slightly to 89.3% compared to 88.4% in the same period last year, almost entirely bolstered by a massive influx of non-core income.

On the operating side, administrative and general expenses rose 3.5  times to Rs60.77m from Rs17.31m, while selling and distribution expenses surged 5 times to Rs96.99m from Rs19.14m.

Other income skyrocketed by 6.94 times to Rs910.86m from Rs131.18m. This extraordinary boost was the primary engine behind the company's bottom-line expansion.

Finance costs jumped to Rs3.12m from a negligible Rs80,708 in the previous year, though the absolute value remained too small to materially impact overall earnings.

Profit before taxation reached Rs1.13bn, up from Rs324.43m in the prior period. The company recorded zero taxation for the period, leaving the net profit identical to the pre-tax figure.

Ultimately, the exceptional net profit growth was overwhelmingly driven by the surge in other income combined with strong core revenue growth, successfully masking the steep contraction in gross margins.

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