Gadoon Textile Mills Sees Earnings Surge Amid Strategic Shifts

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Karachi: Gadoon Textile Mills Limited (GADT) has reported a significant increase in earnings for the first nine months of fiscal year 2025, according to the company’s latest corporate briefing. The company has attributed this growth to improved gross margins and a strategic shift towards value-added products.

The company recorded a topline of PKR 55.4 billion in 9MFY25, marking a modest 2% year-on-year increase compared to PKR 54.5 billion in 9MFY24. While sales of yarn experienced a slight decline, this was compensated by higher volumes in knitted bedding products.

Earnings for the period reached PKR 2.0 billion, translating to an earnings per share (EPS) of PKR 71.5. This represents a sevenfold increase year-on-year, primarily driven by enhanced gross margins, which rose to 9.2% from 6.8% in the same period last year. The improvement was attributed to efficient procurement of raw materials and increased reliance on renewable energy sources.

The company’s core business activities include manufacturing and sales of yarn, knitted bedding products, dyeing services, and milk production. Management has announced plans to expand its value-added textile segment further.

Energy requirements for GADT’s two plants stand at 42MW, with 13% currently sourced from renewable energy. Efforts are underway to reduce energy costs from the current PKR 35-37 per kWh to PKR 30 or lower through a hybrid energy generation strategy.

While the potential impact of U.S. tariffs remains uncertain, GADT is preparing contingency plans to mitigate any adverse effects. The company has no immediate plans for a stock buyback or split, and any decisions on dividends will require board approval.

GADT imports approximately 75% of its cotton, with the rest sourced locally. The company requires 60,000 tons of cotton annually, at a cost of about PKR 18,000 per maund.

In its dairy segment, which comprises around 1,000 cows, milk is sold locally. Due to ongoing challenges, there are no expansion plans in the dairy business, with the focus remaining on cost optimization and profitability.