Even as revenue slips, Gadoon Textile sees profits rise

Gadoon Textile Mills Limited (PSX: GADT) has delivered one of those counter-cyclical scorecards that make seasoned textile investors look twice: revenue drifted lower in fiscal 2025, yet margins fattened and profits surged. The company reported earnings per share of Rs85.33 for FY25, up from Rs28.35 a year earlier, even as net sales eased 2% to Rs70.98 billion. Operating profit climbed 35% to Rs4.85 billion, while the net margin improved to 3% from 1% as finance costs fell and operating discipline bit through the income statement, according to a corporate briefing issued on 10 October. In the June quarter, sales fell 14% year on year but the company still posted quarterly EPS of Rs13.88, underscoring that the heavy lifting was done earlier in the year.

Management attributes the paradox – lower sales, higher profits – to a mix of cost-side work and portfolio balance. First, the group has been replacing older, energy-intensive machinery with more efficient equipment, a move that improves yields and reduces per-unit power draw. Second, its plan to lift green energy to 40–45% of the power mix by March 2026 is already lowering the effective energy cost curve and de-risking against grid volatility. Third, finance costs were tamed: total financial charges fell 36% to Rs2.52 billion, easing a pressure point that had squeezed spinners during the rate spike of recent years. The net of those actions showed up in the gross margin – up to 9% from 7% – and in EBITDA, which rose 28% to Rs7.35 billion despite the softer top line, as detailed in the performance table on page 2 of the briefing.