Apparel Exit Costs Gul Ahmed Rs950m, Drags Group Into Loss

KARACHI: Gul Ahmed Textile Mills Limited (PSX: GATM) swung to a consolidated net loss of Rs338.5 million for the year ended June 30, 2026. The bill for shutting its export apparel business wiped out the profit its remaining operations earned.

The board met in Karachi on Saturday and recommended no cash dividend, no bonus shares and no right shares. A year earlier, the group posted a profit of Rs4.45 billion.

The accounts describe two businesses. Continuing operations earned Rs611.8m after tax. The discontinued segment lost Rs950.4m net of levies. Without the apparel wind-down, Gul Ahmed stays in the black. With it, the group reports a loss per share of Rs0.45, against earnings of Rs6.01 in FY25.

The board decided to exit export apparel in September 2025, almost exactly a year before this result. At the time, the company cited intense regional competition, a stronger exchange rate, a higher advance turnover tax, rising costs of nominated fabrics and elevated energy tariffs. Focus Pakistan Reports

Gul Ahmed Loss Crack in The Core Business

The bigger worry sits in the operations Gul Ahmed kept. Consolidated revenue fell 6.3 per cent to Rs162.01bn from Rs172.93bn. Gross profit fell much harder, down 25.5pc to Rs23.83bn. Gross margin shrank to 14.7pc from 18.5pc.

Operating profit dropped 62.5pc to Rs5.24bn. Administrative costs rose to Rs7.07bn from Rs6.42bn even though sales declined.

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The parent company's standalone books look worse. Standalone revenue slid 10.7pc to Rs129.72bn, and gross profit nearly halved to Rs10.01bn. The company booked a pre-tax loss of Rs490.2m and a net loss of Rs922.6m, or Rs1.24 per share. Its continuing operations earned just four paisa a share.

The gap between the two sets of figures matters. Group entities outside the parent's standalone books added roughly Rs13.8bn in gross profit, and that contribution kept the consolidated continuing business profitable.

Levies eat 71pc of pre-tax earnings

Two items softened the blow. Other income more than doubled to Rs2.26bn. Finance costs fell 23.9pc to Rs5.61bn from Rs7.37bn.

The state then took its share. Levies of Rs1.34bn consumed 71pc of the group's Rs1.89bn profit before levies and taxation. A tax credit of Rs67.6m, compared with a Rs409m charge last year, left continuing operations with a thin profit. The balance sheet also shows a new Rs1.23bn liability for the Sindh infrastructure development cess, which did not appear a year ago.

The results carry some good news. Gul Ahmed ran down inventory hard, and stock-in-trade fell 26.3pc to Rs53.71bn from Rs72.90bn. That freed up cash. Operating activities generated Rs25.20bn in net cash, compared with an outflow of Rs10.93bn in FY25. The group used that cash to cut short-term borrowings by Rs11.8bn to Rs44.27bn. Long-term financing dropped to Rs14.55bn from Rs18.39bn.

The company did not stop investing. It spent Rs8.05bn on property, plant and equipment, up from Rs6.12bn a year earlier, and lifted fixed assets to Rs59.24bn. Equity held nearly flat at Rs51.48bn. Total assets fell to Rs156.19bn from Rs173.11bn, the smaller balance sheet of a company that has shed a business line.

What shareholders face next

Gul Ahmed will hold its annual general meeting on October 27 at Avari Towers, Karachi. The share transfer books will close from October 19 to October 27, both days inclusive.

The apparel exit accounts for the headline loss. The 25pc slide in gross profit across the businesses Gul Ahmed chose to keep is harder to explain, and shareholders are likely to ask about it when they meet next month.