Nishat Mills Ltd., Pakistan’s biggest textile exporter, said first-quarter net profit fell 60 percent as its cost of sales increased.
Net income fell to 664.5 million rupees ($7.7 million) or 1.29 rupees a share, in the three months ended Sept. 30, from 1.66 billion rupees or 4.66 rupees a share, the Lahore-based company said in a filing to the stock exchange today. Sales rose to 17.5 billion rupees from 14.3 billion.
“The company may be sitting on expensive cotton it purchased earlier in this calendar year when prices were hovering around 13,000 rupees a maund,” said Khalid Iqbal Siddiqui, head of research at Invest & Finance Securities Ltd., and who has a “buy” recommendation on the stock. “The same have come down to around 6,000 rupees, which have hurt gross profits for the company.”
Cotton prices almost doubled last year as demand from makers of the fiber outpaced production, draining global stockpiles. In Pakistan, prices rose as much as fourfold last year.