Ashfaq Textile Mills Limited Faces Profitability Pressure Despite Higher Sales in FY2026
Ashfaq Textile Mills Limited has reported a challenging financial performance for the fiscal year ended June 30, 2026, as rising operating costs, weaker fabric demand and increased competition from imported textiles weighed on profitability. According to the company’s 38th Annual Report, sales increased slightly during the year, but gross profit declined significantly and the company recorded a net loss.
Sales Increase Marginally, Profitability Weakens
Ashfaq Textile Mills recorded sales of Rs. 459.42 million in FY2026, compared with Rs. 454.19 million in the previous fiscal year, representing an increase of approximately 1.15%.
However, the company’s gross profit fell to Rs. 19.85 million from Rs. 42.64 million in FY2025, a decline of around 53.4%. The deterioration reflects mounting pressure on production economics and the company’s ability to maintain margins in a difficult textile market.
The company posted a loss before levies and income tax of Rs. 16.06 million, compared with a profit of Rs. 10.11 million a year earlier. Its net loss reached Rs. 16.90 million, against a net profit of Rs. 5.99 million in FY2025.
Earnings per share also moved into negative territory, falling to Rs. 0.36 per share from positive earnings of Rs. 0.13 per share in the previous year.
Global Uncertainty and Rising Costs Affect Business
In its directors’ report, the company identified several factors contributing to the difficult operating environment. These included uncertainty surrounding US tariff policies, conflict in the Gulf region, higher oil prices and increased imports of comparatively cheaper foreign-made fabrics.
According to management, international trade uncertainty affected purchasing decisions and reduced demand for fabrics. At the same time, higher oil prices increased business costs, putting additional pressure on manufacturers already facing intense competition.
The influx of imported fabrics into Pakistan was highlighted as a particularly significant challenge. Management called for government measures to support domestic textile manufacturers and strengthen the competitiveness of local industry.
Production Capacity Adjustments Reflect Market Pressure
The company has also taken steps to adjust its operations in response to challenging market conditions. Its annual report states that 85 of its 243 installed looms were temporarily closed, reducing available production capacity.
Ashfaq Textile Mills operates a weaving facility on Jaranwala Road in Faisalabad and manufactures textile products for the market. The temporary shutdown highlights the operational pressures facing the business as it responds to demand conditions and production costs.
The company’s future performance will depend in part on market recovery, efficient capacity utilisation and its ability to manage costs while maintaining demand for its products.
No Dividend Recommended for FY2026
Given the financial loss recorded during the year, the company’s management has not recommended a cash dividend or bonus shares for FY2026.
The decision reflects the difficult financial results and the need to navigate ongoing business challenges. Shareholders will be able to review the audited financial statements and related reports at the company’s upcoming annual general meeting.
The 38th Annual General Meeting is scheduled for October 27, 2026, at 10:00 a.m. at the company’s registered office on Jaranwala Road in Faisalabad. The meeting will consider the audited financial statements for the year ended June 30, 2026, and the appointment of auditors for the following financial year, among other ordinary business.
Community Support and Corporate Responsibility
Despite its financial difficulties, Ashfaq Textile Mills continued its community support initiatives. During the year, the company contributed Rs. 1.2 million to the Faisalabad Liver Foundation Trust to help provide free medicines and liver-related laboratory tests to deserving patients.
The contribution demonstrates the company’s continued engagement in community welfare while it manages pressure on its core operations.
Outlook: A Difficult Road Ahead
Ashfaq Textile Mills expects the textile sector to remain under pressure as domestic manufacturers contend with import competition, geopolitical uncertainty, changing trade policies and the effects of natural disasters, including floods in Pakistan.
Management believes that government support for domestic manufacturing, including appropriate measures concerning imported woven fabrics, could help improve conditions for local producers.
For the company, restoring profitability will require careful cost management, effective marketing, improved production utilisation and a recovery in demand. Although sales remained relatively stable in FY2026, the sharp decline in gross profit and the move into a net loss underline the importance of improving operating margins.
Investors and market participants will be watching the company’s subsequent financial results for signs of recovery in demand, better capacity utilisation and stronger profitability.
