Falling yarn prices, sluggish global demand, and elevated operating costs have dealt a severe blow to the revenue and profitability of listed textile firms in the first nine months through March of FY26.
The situation worsened in the January-March quarter compared to the previous two quarters due to domestic disruptions, including prolonged Eid holidays and election-related factory closures, which temporarily affected production and export shipments.
A majority of the 58 listed textile companies posted lower profits, while several slipped into fresh losses and some continued to remain in the red for years.
The textile sector also has the highest number of companies under the Z category, with 27 firms currently placed there due to weak financial performance, failure to declare dividends, and non-compliance with annual general meeting requirements.
Financial statements showed that many leading textile and spinning companies experienced sharp declines in both revenue and earnings during July-March of FY26, with some reporting fresh losses.
"Geopolitical tensions, including the US-Israel conflict involving Iran, as well as US reciprocal tariff measures, have affected global trade flows," said Akramul Alam, head of research at Royal Capital.
He said the energy crisis had been disrupting operations, while higher fuel prices and inflationary pressure, followed by weakening consumer demand, had reduced sales and profitability.
"Since selling prices are falling faster than input costs, textile mills are struggling to protect margins even when production volumes remain stable," he added.
Among the leading textile makers, Square Textiles' revenue dropped around 6 per cent, while profit plunged 70 per cent year-on-year to Tk 304 million. The company incurred losses in the third quarter (January-March) due to higher finance costs and lower sales.
The pressure on the bottom line was reflected more severely, highlighting how declining yarn prices compressed margins.
Matin Spinning, a concern of DBL Group, explained that the average selling price of cotton declined to $3.47 per kg from $3.65 per kg amid pricing pressure in the international market.
The company saw its profit decline 9 per cent year-on-year in the nine months through March this year despite marginal growth in sales.
Envoy Textiles, another textile maker, also reported weaker financial performance, primarily due to lower revenue and higher finance costs.
Envoy's revenue dropped 5.5 per cent, while profit fell 2.3 per cent year-on-year in the nine months through March this year. Its third-quarter performance declined sharply, affecting the nine-month performance.
Third-quarter profit fell 37 per cent year-on-year, while revenue slid 13 per cent.
Company Secretary M Saiful Islam Chowdhury said the company had witnessed lower revenue in the third quarter due to holidays on the occasion of Eid-ul-Fitr and the national election.
"Reduced working hours due to Eid holidays and the national election contributed to the sharp decline in revenue and profit in the March quarter, leading to overall profit decline in the nine months," Mr Chowdhury told The Financial Express over the phone recently.
Mr Chowdhury also mentioned that during the third quarter, the company made payments against a number of UPAS LCs, which would help minimise costs in the next quarter.
Despite the challenges, the company secretary said they had secured orders for the next three months and expected stable utility supply conditions to support production continuity.
Shasha Denims' profit plunged 72 per cent year-on-year in the nine months through March as the company incurred a loss of Tk 30 million in the third quarter (January-March) due to lower operational days and lower exports.
Despite lower operational days, the cost of goods sold increased as the company had to absorb full fixed overhead expenses, including mandatory bonuses, employee wages, utility bills, and depreciation costs, according to the company's earnings note.
The denim manufacturer also faced pressure on export earnings as inflationary stress in key overseas markets weakened consumer purchasing power, resulting in a notable decline in average selling prices and squeezing profit margins.
Meanwhile, Far East Knitting and Dyeing incurred fresh losses of Tk 217 million in the nine months through March this year due to lower sales and higher operating expenses.
Its sales declined 18 per cent.
Esquire Knit Composite also reported losses of Tk 129 million during the period despite marginal growth in sales, as operating expenses surged 12 per cent year-on-year during the time under review.
The textile sector's struggles are closely tied to the broader export slowdown, particularly in the readymade garment (RMG) industry, which accounts for more than 80 per cent of Bangladesh's export earnings.
According to Export Promotion Bureau (EPB) data, knitwear exports dropped 6.42 per cent to $15.11 billion, while woven garment exports declined 4.48 per cent to $13.46 billion year-on-year in the nine months through March this year.
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