Shabbir Tiles & Ceramics Ltd, the maker of Stile-branded tiles, sinks and sanitary ware, has slipped into the red as Pakistan’s construction malaise stretches into a second year. Management points to weak homebuilding and deferred renovation demand, expensive energy and logistics, and a structural cost handicap versus Punjab-based rivals. The company says it is leaning into niches – especially porcelain – while cutting its energy bill with solar, but stresses that a demand recovery hinges on easier monetary conditions and improved gas availability over the coming quarters.
STCL reported a loss per share of Rs0.80 for FY25, a sharp reversal from earnings per share of Rs1.34 in FY24. The weak run-rate persisted into the new financial year: 1QFY26 loss per share was Rs0.80, versus Rs0.36 in the same quarter last year. Net sales fell 11% year-on-year to Rs13,846 million in FY25 as volumes and pricing buckled under sector-wide pressure; gross profit slid 24%, driving the gross margin down to 20% from 23% a year earlier. The company swung from operating profit of Rs733 milion in FY24 to an operating loss of Rs141 million in FY25, while EBITDA more than halved to Rs618 million. The deterioration accelerated on a quarterly basis in 1QFY26, when net sales fell 11% and the gross margin eased to 16%, locking in a quarterly net loss that matched the full-year FY25 per-share loss.
The top-line decline is rooted in demand and mix. Sales volume dropped to 8.33 million square metres in FY25, from 10.39 million in FY24, reflecting fewer housing starts and households postponing discretionary remodelling amid high borrowing costs. Lower plant loading meant poorer fixed-cost absorption, amplifying the hit to margins despite management’s efforts to control overheads.
Costs were sticky. The company cites persistent gas supply issues – both availability and low pressure in winter – plus a sharp rise in freight costs over the past 18 months due to elevated diesel prices. These factors pinched gross margins even as the firm pursued efficiencies and price discipline. The briefing also notes that primary raw material is sourced in the North while operations are in the South, saddling STCL with longer hauls than Punjab-based competitors. Meanwhile, ceramic inks, frits and glazes remain imported inputs, exposing cost of goods sold to exchange-rate and import-volatility risk.
The P&L details underscore how quickly operating pressure cascaded. Selling and distribution expenses fell 5% and financial charges fell 10% in FY25, but these savings were outweighed by the drop in gross profit.
Management’s near-term tone is cautious but not bleak. The note flags expectations for a gradual demand recovery over the next eight to nine months, and says operations have been “adjusted accordingly,” a signal that the company is aligning production with a slow thaw rather than a snap-back.
Founded more than four decades ago, Shabbir Tiles & Ceramics is one of Pakistan’s longest-standing branded tile manufacturers and a mainstay of the Stile marque in floor and wall tiles. Over time the group has broadened its product scope to include bathroom fixtures – basins, commodes and accessories – to complement the core surface portfolio, a strategy designed to keep the brand present across the value chain from rough-in to finishing. The company’s market approach has long married a quality/brand-led pitch with selective category focus. Today, management underscores that STCL is the only porcelain tile manufacturer in Pakistan, a differentiator it hopes will support pricing power even as mass-market ceramics are buffeted by aggressive competition.
On market footprint, the briefing places STCL’s market share around 10%, with management expecting it to be stable in volumes and to improve in value terms given a premium-pricing strategy. That balance – holding share while pushing mix and realisations – is central to the brand’s positioning until macro conditions allow for broader category expansion.
From an operating-structure standpoint, the company remains Southern-based, which historically allowed it to serve Sindh and Balochistan efficiently and export via ports when regional markets were receptive. That geography has become a double-edged sword in a high-diesel, high-freight environment because Northern raw materials must be hauled South. As a result, Punjab-based rivals who can source closer to plant enjoy a structural freight advantage, one that has widened over the past year and a half.
STCL’s portfolio spans ceramic and porcelain floor and wall tiles under the Stile brand, supplemented by sanitary ware – bathroom sinks, toilets and related fittings. The porcelain capability is its calling card: management highlights that no other local producer currently makes porcelain tiles, a segment prized for durability and finish that commands a premium. In commoditised segments, the firm’s stance is to compete selectively, resisting a race to the bottom on price.
The industry’s pain is evident in utilisation rates. The broader tile industry is operating at roughly one third of installed capacity, yet STCL has sustained a higher utilisation of around 50%, reflecting both its brand pull and tighter alignment of production to orders. That said, half-loaded kilns still dilute economies of scale, so sustained gains in demand are necessary to restore normal margins.
Tiles are energy-intensive. The firm reports ongoing gas availability and pressure issues in winter – a recurring operational headache in Pakistan’s energy mix. To mitigate rising energy costs, STCL has expanded its solar capacity, aiming to reduce reliance on coal and LPG. Solar yields are naturally diurnal and weather-dependent, but over a year they can shave a meaningful share off electricity costs, especially during the sun-rich summer months when kilns and spray dryers draw heavily.
On raw materials, clays and other primary inputs are trucked from the northern region; ceramic inks, frits and glazes are still imported. The import content complicates cost control when the rupee is weak or when import curbs delay consignments, forcing higher buffer stocks or opportunistic purchases at unfavourable rates.
The note points to a sharp increase in freight costs over the past 18 months on the back of elevated diesel prices. For a product that is heavy, fragile and low in value per kilogram, line-haul and last-mile expenses can decide whether a sale is profitable. The spread between ex-factory prices and retail tags for tiles often has as much to do with diesel and handling as with manufacturing, so this headwind matters.
Encouragingly for formal players, the briefing says smuggling from neighbouring countries has declined significantly, easing a longstanding distortion that undercut compliant manufacturers on price. While smuggled stock never fully disappears, a lower tide can lift formal margins, improve dealer confidence in branded lines, and stabilise realisations.
The past two years have been rough for construction materials across Pakistan. High interest rates have cooled mortgage activity and pushed many homebuilders and small developers to the sidelines; households have deferred discretionary remodelling, and commercial projects have slowed. For producers of cement, steel, glass and ceramics, this has meant a battle to keep kilns and grinders running efficiently. STCL’s 11% fall in revenue and 24% drop in gross profit in FY25 capture that pressure in microcosm.
Within ceramics specifically, the competitive map has shifted. The company notes that four large Chinese players are operating locally with state-of-the-art machinery. Chinese entrants tend to bring newer kilns, precise digital printing lines, and integrated glaze and body preparation – allowing faster changeovers, higher first-pass yield and, crucially, lower unit energy per square metre. In a normal economy, fresh capacity can spur innovation and promote exports. In a demand-constrained domestic market, it intensifies price competition, particularly in standard sizes and looks where brand and technical advantages are less visible. For a legacy brand like Stile, the strategic answer is to defend value-added niches (e.g., porcelain, premium finishes) and use the brand to maintain dealer shelf space even when volumes are sluggish.
Energy remains the other systemic variable. Gas supply intermittency and winter pressure drops add hidden costs – idle time, re-firings, and scrap – on top of outright price inflation. Firms with captive solar and more flexible kiln schedules can manage these shocks better, but the industry still depends on stable gas and grid supply for peak efficiency. STCL’s solar expansion is therefore a defensive investment as much as a sustainability story.
There are, however, a few green shoots. Management expects a gradual demand recovery within eight to nine months, a timeline that loosely aligns with market hopes for monetary easing and a reacceleration in private construction if inflation moderates. Also positive is the decline in smuggling, which narrows the price undercut from grey channels and could help formal makers like STCL win back contractors who value warranty, after-sales assurances and consistent shade batches for large jobs.
The next leg for STCL likely looks like this: six to nine months of careful volume management while waiting for mortgage rates and project financing to ease; a gradual rebuild of utilisation toward and beyond 50%; and a margin lift from mix, energy self-generation, and better fixed-cost absorption. Risks are obvious: a slower-than-expected rate-cut path, renewed gas curtailments in winter, or a fresh wave of price-led competition by local Chinese-operated plants could delay the turn.
Yet the company’s brand equity, porcelain uniqueness, and installed distribution give it tools many smaller rivals lack. Add in the reduced drag from smuggled imports and the potential for remodelling to revive first – even before new-home construction – once household confidence steadies, and the case for a measured recovery in the Stile franchise becomes plausible.
Shabbir Tiles’ latest numbers reflect the sector’s harsh macro – thin demand, high energy and logistics, and price-aggressive competition. The company’s path back runs through a careful defence of premium niches, incremental cost relief from solar, and a macro tailwind from easier rates. If those elements align, the Stile brand should be well-placed to benefit when Pakistani households and builders return to the showroom.
