Airlink’s earnings outlook slashed as mobile demand softens

Airlink Communication Ltd (PSX: AIRLINK) faces a sharp downgrade in earnings forecasts after a difficult nine‑month trading spell characterised by weaker smart‑phone sales and a ballooning working‑capital bill. In a note circulated to institutional investors this week, brokerage house Topline Securities cut its profit estimates for the Lahore‑based assembler‑distributor by 41% for fiscal year 2025 and 36% for fiscal year 2026, citing a “perfect storm” of subdued consumer demand, margin compression, and higher finance costs.

The bearish turn follows the release of Airlink’s first nine months of fiscal year 2025 results, which showed revenue sliding 8% year‑on‑year to Rs85 billion and net profit decelerating more sharply than the market had anticipated. Management blamed an industry‑wide slowdown in handset turnover. Pakistan Telecommunication Authority (PTA) data underline the trend: local manufacturers assembled 26.09 million handsets in the first nine months of fiscal year 2025, down 8% on the comparable period. Analysts point to three overlapping headwinds:

1. A high base effect: fiscal year 2024 witnessed a post‑import‑restriction rebound as inventories were replenished, making year‑on‑year comparisons unforgiving.
2. An elongated replacement cycle: with global flagship launches offering incremental upgrades, Pakistani consumers are holding on to devices for longer.
3. Shrinking discretionary spend: headline inflation, though moderating, has eroded purchasing power over the past three years, forcing households to prioritise essentials.

Against that macro backdrop, Topline now projects Airlink will close fiscal year 2025 with turnover of Rs110 billion, well below its previous forecast of Rs139 billion. The brokerage’s fiscal year 2026 sales projection has similarly been trimmed from Rs168 billion to Rs130 billion.