Interloop Profit Plunges 66% Despite Beating Expectations

Islamabad: Interloop Limited (ILP) reported a significant 66% year-on-year drop in its earnings per share (EPS) to Rs3.96 for the fiscal year 2025, despite exceeding industry forecasts. The textile manufacturer announced a consolidated profit of Rs5.6 billion, surpassing projections, while the fourth-quarter profit reached Rs2.6 billion (EPS of Rs1.88), marking a 5% yearly increase and a substantial 79% surge compared to the previous quarter. This outperformance is attributed to better-than-anticipated gross margins.

The company also declared a dividend of Rs1 per share for the fourth quarter, aligning with market predictions and representing a payout ratio of 29%. Net revenue for FY25 witnessed a 13% yearly growth, totaling Rs179 billion. The fourth quarter alone generated Rs48.9 billion in net sales, reflecting an 11% rise year-on-year and a 13% jump quarter-on-quarter, exceeding projections. This upswing is attributed to typical seasonal patterns, with revenue usually climbing in the final quarter.

Despite increased revenue, gross margins contracted to 20% for FY25, down from 28% in FY24. The fourth quarter witnessed margins of 22%, matching the same period last year but improving from 20% in the third quarter, aided by robust revenue growth in the final quarter. The effective tax rate for FY25 reached 38% (1.92% of turnover), considerably higher than the 11% (1.29% of turnover) observed in FY24. For the fourth quarter, the effective tax rate was 38% (3.35% of turnover) compared to 16% (1.04% of turnover) in 4QFY24 and 30% (1.50% of turnover) in 3QFY25.

Distribution costs saw a 21% yearly increase, reaching Rs7 billion, while administrative expenditures climbed by 18% to Rs10.7 billion in FY25. Conversely, other expenses decreased by 56% to Rs948 million, mirroring the trend in operating profit. Other income declined by 65% year-on-year to Rs534 million in FY25. Finance costs, however, experienced a 6% yearly decrease, amounting to Rs9.6 billion, due to lower interest rates compared to the prior year. JS Global maintains a buy rating for the company, projecting price-to-earnings ratios of 10.0 for FY26 and 6.3 for FY27.