Zephyr Textiles Limited (ZTL) Reports Declining Profitability Amid Weak Local Demand
Zephyr Textiles posted a sharp fall in net profit for 2024 and a modest revenue dip in 2025, driven by higher energy costs, weaker domestic sales and shrinking margins.
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Desk Analysis
How This Affects the Exchange
Sector Effect
Negative · Do not buy
Textile sector profit slump and margin compression → Don't buy ZTL.
Sectors & Direction
Desk read
Desk call: Do not buy · Negatively affected
- TextileNegatively affected
Companies
Companies Mentioned
- ZTL· Negatively affected · Do not buy
Mentions in This Briefing
Sectors: Textile — Negative · Do not buy. PSX tickers: ZTL. Textile sector profit slump and margin compression → Don't buy ZTL.
Full Story
Open on Business Recorder## Company Overview
Zephyr Textiles Limited (PSX: ZTL) was founded as a private limited company in 1999 and became a public limited company in 2004. The firm manufactures, dyes and trades woven garments, including towels.
## Shareholder Structure (as of 30 June 2025)
- Total shares outstanding: 59.43 million - Directors, CEO, spouses and minor children: 72.27 % (majority stake) - Local general public: 19.80 % - Banks, DFIs and NBFIs: 7.42 % - Remaining shares: held by other categories
## Financial Performance Snapshot
| Year | Net Sales (Rs mn) | GP Margin | OP Margin | Net Profit (Rs mn) | EPS (Rs) | |------|-------------------|-----------|-----------|--------------------|----------| | 2021 | 6,128.89 | 13.2 % | 7.72 % | 302.08 | 5.08 | | 2022 | 7,384.16 | 10.0 % | 4.87 % | 182.17 | 3.07 | | 2023 | 8,103.08 | 15.08 % | 6.91 % | 237.96 | 4.00 | | 2024 | 8,393.88 | 10.68 % | 5.29 % | 45.65 | 0.77 | | 2025* | 8,279.47 | 9.85 % | – | – | – | *2025 figures are interim as of 30 June.
### Key Trends
- Revenue Growth: After strong top‑line growth in 2021‑2023, sales rose only 3.6 % in 2024 and fell 1.4 % in the first half of 2025. - Export vs. Local Mix: Export sales accounted for 68.75 % of 2024 revenue, providing resilience, but domestic sales continued to weaken due to the prevailing political‑economic environment. - Margin Compression: Gross profit margin fell from a peak of 15.08 % in 2023 to 9.85 % in 2025, mainly because of higher energy tariffs and input costs. Operating profit margin also declined, reaching 5.29 % in 2024. - Profitability: Net profit plunged 80.8 % in 2024 to Rs 45.65 million and EPS dropped to Rs 0.77. The 2025 interim results show a further erosion of earnings. - Cost Pressures: Energy tariff hikes increased cost of sales by 8.95 % in 2024. Distribution expenses rose with export volumes, while administrative costs grew due to inflation‑driven payroll increases. - Financing: Finance costs surged 54.55 % in 2024 because of higher discount rates and additional borrowings. Gearing improved modestly, falling to 36 % in 2023 but rising again as debt levels increased. - Other Income/Expense: Gains from the sale of fixed assets boosted other income in 2024, while other expenses fell sharply due to lower provisioning and reduced exchange losses.
## Outlook
The company’s reliance on export markets provides some buffer, yet persistent energy price volatility, a weak domestic market and deteriorating margins suggest continued earnings pressure. No major strategic partnership or capital infusion was announced in the period.
## Shariah Consideration
Zephyr Textiles operates in a conventional textile manufacturing segment. Its activities are generally permissible under Shariah, but the deteriorating financial health may affect risk‑adjusted returns for Shariah‑compliant investors.