LAHORE: Service Global Footwear Limited (PSX: SGF) reported a steep 65.33% year-on-year decline in its net profit for the quarter ended March 31, 2025, clocking in at Rs122.01 million compared to Rs351.92m in the same period last year. The fall in earnings came despite a 5.87% growth in revenue, which rose to Rs4.81 billion, as cost pressures and a sharp drop in returns from an equity-accounted investee dragged down overall profitability.
The company’s gross profit marginally dipped by 1.28% to Rs840.33m, as the rise in cost of sales outpaced revenue growth, increasing by 7.51% to Rs3.97bn. Operating expenses weighed heavily on the quarter, with distribution costs surging by nearly 30% to Rs455.29m and administrative expenses rising 14% to Rs201.01m. Although other expenses fell by 62% to Rs6.89m, total operating expenses still rose 21.52% year-on-year to Rs663.19m, eroding margins.
Profit from operations slipped to Rs251.03m, down 29.52% compared to the same period last year. The company also recorded a 42% decline in other income, which fell to Rs177.14m. A key drag on earnings was the company’s share of profit from its equity-accounted associate, which dropped sharply by 57.37% to Rs154.4m, compounding the pressure on pre-tax earnings.
Finance costs decreased by nearly 25% year-on-year to Rs153.93m, offering some relief on the financing front. Profit before tax dropped 53.63% to Rs209.18m, despite a 31.91% decline in levy charges. After accounting for taxation of Rs87.17m, the company’s net earnings came in at Rs122.01m, translating into earnings per share of Rs0.59, down from Rs1.71 last year.
Despite the disappointing results, SGF’s share price closed the day 2.96% higher at Rs94.90 on the Pakistan Stock Exchange, indicating that the earnings drop may have been priced in or offset by investor confidence in longer-term fundamentals.
