Bannu Woolen Mills Limited: Resilience in Pakistan's Textile Sector

Bannu Woolen Mills Limited, a prominent player in Pakistan's textile industry, was established in 1960 as a public limited company. Initially founded by the Pakistan Industrial Development Corporation (PIDC), it was later acquired by the Bibojee Group of Companies. The company primarily focuses on manufacturing and selling woolen yarn, cloth, and blankets, catering to both local and international markets.

As of June 30, 2023, Bannu Woolen Mills Limited (PSX: BNWM) has approximately 9.5 million shares outstanding, held by 1,107 shareholders. The local general public holds the largest stake at 54.04 percent, followed by associated companies and related parties with 34.06 percent. The leadership, including directors and their families, accounts for 5.83 percent of the shares, while the National Investment Trust (NIT) and Investment Corporation of Pakistan (ICP) hold 4.56 percent.

Over the years, Bannu Woolen Mills has experienced significant fluctuations in its financial performance. After facing a decline in net sales during 2019 and 2020, the company saw a recovery in its topline until 2023. However, this growth trend began to wane, leading to a decline in 2024. The company’s bottom line, which had shown promise in 2021, faced challenges again in 2022 and 2023, despite an increase in net sales. Fortunately, BNWM managed to post a net profit in 2024, indicating a potential turnaround.

In 2019, the company’s topline fell by 18.33 percent year-on-year, primarily due to a milder winter season that adversely affected sales. Coupled with deteriorating macroeconomic conditions, including high inflation and a weaker Pakistani Rupee, the company had to suspend two shifts of production to manage inventory effectively. This led to a significant drop in production, with yarn output decreasing by 62 percent and cloth production down by 29 percent compared to the previous year.

Despite the challenges, Bannu Woolen Mills made strategic adjustments. In 2020, the company faced a staggering 52 percent decline in topline sales, exacerbated by the COVID-19 pandemic. However, it managed to resume its second production line, although production volumes still fell significantly. The cost of sales decreased, which improved the gross profit margin, but the overall financial health remained under pressure.

In 2021, the company experienced a remarkable recovery, with net sales surging by 112.69 percent year-on-year as lockdown restrictions eased. This rebound allowed BNWM to resume its third production line, resulting in increased production of both yarn and cloth. However, the cost of sales also rose sharply, squeezing profit margins.

As Bannu Woolen Mills navigates through these ups and downs, it is clear that the company is resilient and capable of adapting to changing market conditions. The textile industry in Pakistan faces numerous challenges, but with strategic planning and effective management, BNWM can continue to thrive. Investors and stakeholders should keep a close eye on the company’s performance in the coming years, as it may offer valuable insights into the broader economic landscape of the textile sector in Pakistan.