Tariffs and energy costs hit Nishat’s first-half results
Pakistan-based Nishat Mills’ first-half revenue declined by 3% from PKR 89.4 billion ($320.1 million) in the same period last year to PKR 86.9 billion in the current half-year.
This decrease was mainly driven by unfavourable rate variances,as global brands passed US tariffs and regional competition costs on to suppliers through tough price targets, according to the filing. The company director's report noted that although the volume variance was favourable, it was insufficient to offset pricing pressures.
Rising production costs, including high energy tariffs and a dependency on imported raw materials, further worsened the situation. As a result, gross profit fell by 16% to PKR 1.6 billion.
Finance costs decreased by PKR 913 million, from PKR 4.6 billion to PKR 3.7 billion, providing some relief. However, dividend income dropped by PKR 2.2 billion due to lower payouts from investee companies in the power sector. Consequently, profit after tax diminished from PKR 4.1 billion to PKR 3.3 billion, reflecting reduced operating margins and lower other income.
The director said the first half was characterised by a complex global economic environment, marked by sluggish growth in major economies, significant geopolitical turbulence and widespread US import tariffs. While key macroeconomic indicators of the Pakistani economy showed signs of improvement, the textile sector remained stagnant due to weak global demand and high input costs.
Pakistani exporters are feeling the effects of US tariffs and increasing competition from regional rivals, including India, China, Vietnam and Bangladesh. Additionally, the sector faces a threat from the landmark trade agreement between India and the European Union, which could diminish Pakistan's GSP Plus competitive advantage.
To counteract rising energy costs and ensure fuel security, the Nishat is investing in renewable energy projects across its facilities, including solar power generation and battery energy storage systems. Collectively, these initiatives are expected to strengthen its competitive position, diversify its customer base and support long-term growth.
