Towellers Limited (TOWL) reported earnings per share of PKR 16.87 for FY25, compared to earnings per share of PKR 32.91 in FY24. Furthermore, in 1QFY26, the company reported earnings per share of PKR 5.32, compared to earnings per share of PKR 10.46 in the same period last year (SPLY).
The company is currently operating at close to 80% capacity utilization. Ongoing investments are focused primarily on efficiency enhancements rather than immediate capacity expansion, as the new factory buildings remain under construction and its part of the company’s five year growth plan.
Management indicated that margin improvement will depend largely on the global demand environment particularly a recovery in North America rather than solely on the commissioning of new machinery. They also noted that some key customers are currently experiencing short term liquidity constraints; once those eases, the company expects purchasing patterns to normalize. Towellers Limited does not have an in-house spinning unit; instead, it manages raw material procurement by closely monitoring market trends and leveraging long-standing relationships with spinning partners.
Seasonality continues to play a key role in performance. Q1 is typically the strongest quarter, while Q2 usually observes subdued sales. Management is hopeful that Q3 will deliver a better than usual outcome this year due to changes in the tariff structure. The strong profitability recorded in FY2023 was driven by a combination of sharp currency devaluation, high interest rates, and government incentives.
The company’s solar installation now caters to approximately 40% of total electricity requirements, significantly reducing reliance on thermal energy. The estimated payback period for this investment is around five years. Management reiterated that there is no fixed dividend policy going forward, with payouts dependent on capital expenditure requirements and overall liquidity.
Important Disclosures
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