Textile exports down by 10% in FY-12
August 03, 2012
Pakistan’s textile exports were recorded at $12.356 billion during the previous financial year (2011-2012), which are 10.38 per cent lower than the exports of $13.788 billion in the preceding fiscal year (2010-2011).
According to the figures released by Pakistan Bureau of Statistics (PBS), Pakistan exported textile commodities worth of $12.357 billion in July 2011-June’12 period as compared to $13.788 billion in the same period of previous financial year. Meanwhile, textile’s exports also went down by 17.70 per cent during the month of June 2012 against the same month of last year. Country exported textile commodities worth of $1.083 billion in June 2012 against $1.315 billion of June 2011.
As per the data released, Pakistan’s textile exports in June 2012 were recorded at US$1.1bn, down 5 percent month-on-month (MoM) and 17.7 percent year-on-year (YoY). With this, full year textile exports reached $12.4 billion in FY12, depicting a decline of 10.4 percent YoY. Lower cotton prices coupled with a slowdown in global demand and energy shortage in the country were the main reasons for this decline. On a quarterly basis, slightly higher cotton prices helped provide some stimulus to exports in 4Q, as they rose by 10 percent quarter-on-quarter (QoQ). Hence, analyst eye relatively better results for export oriented textile units in 4Q.
Nevertheless, the energy crisis in the country poses a great risk to meeting export orders by textile manufacturers going forward. At current levels, we maintain ‘Hold’ calls on both NML and NCL.
Lower export volumes of cotton cloth and relatively lower cotton prices compared to May 2012 and June 2011 were the main reasons for the slow down in exports. Furthermore, persistent energy crisis delayed delivery of orders while additional drag to export numbers came due to the current slow down in Europe, amid the recent debt crisis. However, some respite can be found in quarterly numbers as textile exports were up by 10 percent QoQ which is likely to be beneficial for export oriented textile units during 4QFY12.
With international cotton prices diving below a $1 per lbs mark, analyst anticipate local prices to remain upward sticky due to an expectation of a bumper crop in FY13. Currently, cotton price in the international market is hovering around $0.85 per lb, down from its average of $1.01 per lb in FY12. However, monsoon flooding remains a key risk for the bumper crop.
Persistent energy crisis in the country along with slow down in demand from the EU zone also remain key challenges for the textile units. In addition, imposition of import duties on fabrics by Turkey (one of the major importer of grey fabric) can put pressure on Pakistan’s textile exports.
It might be mentioned here that industrial sector of the country is facing worst kind of power loadshedding (gas and electricity) from last few years, which is resulting in reduction in exports. Similarly, prices of Pakistan-made textile commodities had decreased in international market, which is also one of the reasons for reduction in exports.
According to the figures released by PBS, the product-wise details showed that raw cotton exports increased by 26.65 percent during the period under review, cotton yarn exports decreased by 18.48 percent, cotton cloth exports went down by 6.42 percent, cotton carded exports declined by 64.73 percent, yarn exports went down by 12.83 percent, knitwear export declined by 14.37 percent, bed wear 16.30 percent, towels 10.25 percent, tents export enhanced by 110.47 percent, readymade garments exports decreased by 7.84 percent, art silk and synthetic textile exports decreased by 10.81 percent, made up articles export reduced by 6.43 percent and other textile materials exports increased by 5.65 percent in July-June period of 2011-12 against the July-June 2010-11 period, according to PBS data.
Meanwhile, the figures revealed that the country’s food exports also registered a decrease of 6.03 percent in July-June period of the year 2011-12 against the same period last year. The break-up of food group exports revealed that rice exports went down by 4.57 percent in the period under review, fish exports increased by 6.53 percent, fruits exports surged by 22.49 percent, tobacco exports enhanced by 437 percent, vegetables exports reduced by 32.65 percent, wheat 78.56 percent, spices exports decreased by 0.71 percent, oil seeds export 52.85 percent, sugar 100 percent, meat 14.28 percent and all other food items exports enhanced by 33.71 percent in the period under review.
Meanwhile, other manufactures group also enhanced by 20.34 percent. In this group, exports of carpets, rugs and mats went down by 8.80 percent and sports goods exports increased by 0.47 percent during the period under review.
Similarly, the engineering goods exports enhanced by over 10.78 percent, surgical goods and medical instruments exports also went up by 14.10 percent in July-June period of the last fiscal year against the same period last year.