Bangladesh's leading textile and spinning companies saw business momentum weaken sharply in the October-December quarter, as subdued global demand, cautious buying by international apparel brands and persistent cost pressures took a toll on revenues and profits.
The typical a peak export season delivered uneven outcomes, with many firms reporting thinner margins and softer order books.
Quarterly disclosures to the Dhaka Stock Exchange (DSE) reveal year-on-year declines in revenue for almost all major listed textile firms in the second quarter of FY26, while profitability deteriorated markedly for several large players.
Falling yarn prices, muted export orders and higher operating costs combined to dampen performance, despite some stabilisation in cotton prices, industry insiders pointed out.
Among spinning companies, Malek Spinning Mills reported revenue of Tk 6.73 billion in the October-December quarter of FY26, down 6.0 per cent from Tk 7.13 billion a year earlier.
Its profit fell sharply by 37 per cent to Tk 318.5 million, compared with Tk 508.7 million in the same period of FY25.
In its disclosure, Malek Spinning said the cost of goods sold rose during the quarter as sales prices declined faster than raw material prices, while factory overheads increased.
The company also cited weaker export demand, which weighed on sales and gross profit and ultimately dragged down net earnings.
Square Textiles recorded a steeper contraction, with revenue falling 14 per cent year-on-year to Tk 5.80 billion. Its profit plunged by 93 per cent to Tk 27.7 million, from Tk 381.3 million in the corresponding quarter of the previous fiscal year.
Square Textiles said its net profit declined significantly due to lower yarn prices coupled with higher finance costs, as selling prices dropped more rapidly than input costs.
Envoy Textiles reported mixed operational trends during the quarter. While fabric exports rose 12 per cent, cotton yarn exports plunged by 65 per cent, pulling down overall revenue.
As a result, the company's revenue declined by 10 per cent year-on-year to Tk 4.12 billion.
Despite the revenue fall, Envoy Textiles managed to post marginal profit growth, with net profit rising slightly to Tk 350 million from Tk 347.9 million a year earlier.
Speaking to The Financial Express, company secretary M Saiful Islam Chowdhury said the firm has gradually shifted away from direct cotton yarn exports as in-house consumption increased.
Yarn exports, which once accounted for around 40 per cent of total production, have declined to about 20 per cent in the second half of the fiscal year, while overall yarn output has remained largely unchanged.
He said the shift supported the company's denim segment, which recorded 11.67 per cent growth.
Net profit after tax from the denim mill rose to around Tk 730 million during July-December of the current fiscal year, compared with about Tk 600 million in the same period of the previous fiscal year.
In the denim segment, Shasha Denims reported revenue of Tk 3.28 billion, down 4.0 per cent year-on-year, while profit dropped sharply by 65 per cent to Tk 39.5 million.
Shasha Denims attributed the profit decline mainly to higher costs of goods sold and lower selling prices, which significantly compressed gross margins.
The company said steady profit contributions from associate firms helped cushion the fall in net earnings.
Matin Spinning also highlighted the impact of falling yarn prices. The company said revenue declined despite higher sales volumes, as the average selling price per kilogram fell to $3.47 from $3.68.
Although cost efficiencies supported its gross margin, the weaker price environment weighed on overall profitability.
During the quarter, Matin Spinning Mills posted a 2.0 per cent fall in revenue to Tk 2.15 billion, while profit declined by 36 per cent to Tk 99.1 million.
Meanwhile, Fareast Knitting and Dyeing Industries reported revenue of Tk 2.01 billion, down 7 per cent year-on-year. Its profit nearly evaporated, plunging by 99 per cent to Tk 1.0 million from Tk 77 million in the same quarter of FY25.
Industry insiders said the sector's challenges extend beyond yarn price volatility. Production costs have risen by around 30 per cent over the past two years due to higher gas tariffs, wage hikes and irregular gas supply, eroding the competitiveness of local mills.
According to National Board of Revenue data, cotton yarn imports surged 39 per cent in 2024 to $2.28 billion, while fabric imports by knitwear factories rose 38 per cent to $2.59 billion, intensifying competition for domestic producers.
newsmanjasi@gmail.com
