Verdict: Pakistan Cables returned to profit in FY2026, but the quality of the turnaround is mixed. Sales rose 16.2% to Rs33.79 billion and exports accelerated sharply, while finance cost eased and the company completed the move to its Nooriabad manufacturing base. Yet gross margin stayed at 10.4%, well below the levels seen two to three years ago, operating expenses grew faster than revenue, and operating cash flow remained deeply negative. The move from a pre-tax loss to Rs588.9 million of profit was also helped materially by other income and the share of profit from an associate. The result is therefore best read as a genuine recovery in scale and financing pressure, but not yet a full restoration of core margin or cash-conversion quality. Annual Report 2026
Results at a glance
Company Name: Pakistan Cables Limited
Ticker: PCAL
Reporting period: year ended June 30, 2026. These are the audited annual financial statements of Pakistan Cables Limited. A.F. Ferguson & Co. issued its audit report dated September 14, 2026, and the annual report was transmitted through PSX on September 15, 2026. Chinoy Engineering & Construction (Private) Limited (CECL) is accounted for as an associate rather than consolidated as a subsidiary. PSX / annual report
Alpha QoQ Score: 51.12
TTM Performance Score: 84.64
3Y Business Perf Score: 44.33
Sector Leadership Score: 44.28
These four scores are AlphaGen model outputs, not company-reported figures.
- Net sales were Rs33.787 billion, up 16.2% from Rs29.088 billion. Annual Report 2026
- Gross profit rose 16.1% to Rs3.514 billion, but gross margin was essentially unchanged at 10.4%. Annual Report 2026
- Profit before tax improved to Rs588.9 million from a Rs367.6 million loss, a swing of about Rs956.5 million. Profit after tax was Rs166.2 million versus a Rs280.6 million loss; EPS recovered to Rs3.05 from negative Rs5.15. Annual Report 2026
- Finance cost fell 6.6% to Rs2.273 billion. Net cash used in operating activities was Rs2.398 billion, slightly worse than Rs2.347 billion a year earlier. Annual Report 2026
- Trade debts increased 21.6% to Rs9.232 billion, while inventory fell 7.7% to Rs6.942 billion. Annual Report 2026
- The board did not recommend a dividend, citing elevated borrowing requirements associated with working capital. Directors’ Report
What improved
The most visible improvement was scale. Revenue increased by Rs4.70 billion, extending a multi-year top-line expansion from Rs21.65 billion in FY2023 to Rs26.17 billion in FY2024, Rs29.09 billion in FY2025 and Rs33.79 billion in FY2026. The current year therefore did not represent a rebound from a depressed sales base; it was another step up in nominal activity. Audited financial history
Exports were an important part of that growth. Export sales increased to Rs3.433 billion from Rs1.974 billion, roughly 74% year on year, while local sales rose about 12% to Rs30.354 billion. Exports consequently represented about 10% of total sales versus roughly 7% a year earlier. Africa remained the largest disclosed export region and sales also expanded sharply across Asia excluding Pakistan and South America. This improves geographic diversification, even though the domestic market still dominates the business. Revenue geography note
The company also completed the transition from its old SITE Karachi factory to its 42-acre Nooriabad facility. Management highlights the new plant’s 69kV CCV line, aluminium-rod capability, in-house PVC compounding, renewable-energy installations and testing laboratories. Economically, the relocation matters because it gives Pakistan Cables a larger and more modern manufacturing base from which to pursue utility, infrastructure and export orders. The key question is no longer whether the plant exists, but how quickly the additional capabilities translate into better margins and cash returns. Directors’ Report
Financing pressure eased at the income-statement level. Finance cost declined to Rs2.273 billion from Rs2.432 billion despite higher year-end short-term borrowing. The notes show lower conventional-finance expense alongside greater use of export-linked foreign-currency facilities and refinance lines carrying lower stated rates. That mix suggests—rather than proves—that funding composition helped offset the larger borrowing requirement. Long-term financing also fell materially during the year. Finance and borrowing notes
What weakened / needs attention
The biggest limitation is that gross economics did not improve with the higher sales base. Gross profit rose almost exactly in line with revenue, leaving gross margin flat at 10.4%. That is better than another year of deterioration, but it does not represent a margin recovery. Pakistan Cables’ gross margin was 14.7% in FY2023 and 12.85% in FY2024 before falling to 10.4% in FY2025. FY2026 stopped the slide rather than reversing it. Annual Report 2026
Operating expenses then grew faster than sales. Marketing, selling and distribution costs increased about 28% to Rs1.249 billion, with management pointing to higher advertising and carriage/forwarding costs, while administrative expenses rose about 24% to Rs461 million. As a result, the improvement in profit generated directly after gross profit was much smaller than the headline revenue increase. Directors’ Report
Management also describes the domestic construction sector as subdued, with private investment held back by high construction costs and only gradual recovery in consumer spending. That context matters because wires and cables are exposed to housing, commercial development, industrial activity and utility investment. The company was able to grow anyway, especially through exports, but a weak construction backdrop may help explain why volume growth did not translate into stronger gross margins. Directors’ Report
Why the profit turnaround is less core than it looks
The shift from a pre-tax loss of Rs367.6 million to pre-tax profit of Rs588.9 million is substantial, but the bridge deserves close attention. Other income almost doubled to Rs661.7 million from Rs350.8 million. Within that figure, Rs320.2 million came from discounting a long-dated Sindh Infrastructure Development Cess liability after settlement terms were agreed. This is an accounting gain linked to the liability’s present value, not recurring cable sales. The liability will subsequently unwind through finance cost over time. Other income / cess notes
Pakistan Cables also recorded Rs419.8 million as its net share of profit from associate Chinoy Engineering & Construction (Private) Limited after impairment, compared with only Rs44.9 million a year earlier. The underlying share of associate income was Rs480.6 million, followed by a Rs60.8 million impairment that reduced the investment’s carrying value to Rs350 million. The FY2026 accounts classify the stake as held for sale following a proposed buyback. Associate investment note
Together, other income and the net associate contribution amounted to roughly Rs1.08 billion—more than reported pre-tax profit. This does not mean the core cable business was loss-making before every adjustment, because other income includes several normal items and finance cost is also a major burden. It does show, however, that the turnaround cannot be attributed solely to better cable manufacturing margins. The associate contribution in particular should not be extrapolated if the proposed divestment is completed. Annual Report 2026
Tax then absorbed most of the reported pre-tax recovery. Income-tax expense was about Rs422 million against a tax credit in the prior year, leaving PAT of only Rs166 million on PBT of Rs589 million. The company reports an effective tax rate of 71.8%, with a large prior-year component and the impact of minimum-tax carryforwards. The FY2026 PAT therefore understates the operating and pre-tax recovery, but it also warns against assuming that the accounting tax line will immediately normalize to a simple statutory rate. Tax note
Cash flow, working capital and debt
The most important quality test is cash conversion, and FY2026 was weak. Net cash used in operating activities was Rs2.398 billion, slightly worse than the Rs2.347 billion outflow in FY2025. Even before finance costs and taxes, cash generated from operations fell to Rs726 million from Rs835 million. A profitable P&L therefore did not translate into operating cash. Cash-flow statement
Working capital was the main reason. Trade debts rose by Rs1.64 billion to Rs9.23 billion and the cash-flow working-capital bridge shows receivables absorbing roughly Rs1.65 billion. Inventory moved in the other direction, falling by about Rs583 million to Rs6.94 billion, so the year-end cash problem was not simply unsold stock accumulation. It was primarily the amount of cash tied up in customers and other operating balances, compounded by more than Rs2.1 billion of finance costs paid and substantial taxes and levies. Cash flow / working-capital note
The financing response was a greater reliance on short-term funding. Short-term borrowings rose to Rs13.26 billion from Rs10.42 billion, including a new Rs4 billion six-month Sukuk used for working capital. Long-term financing fell to Rs4.92 billion from Rs6.54 billion, so the debt mix became more short-dated even as income-statement finance cost declined. Current assets of Rs20.84 billion were slightly below current liabilities of Rs20.99 billion, leaving the current ratio just under 1x. Borrowing and balance-sheet notes
This explains the board’s decision not to recommend a dividend. Management explicitly links the nil payout to the company’s higher borrowing requirements arising from increased working capital. That is an economically important signal: the business returned to accounting profit, but management is still prioritizing liquidity and funding needs over cash distribution. Directors’ Report
Exports and Nooriabad: the strongest strategic positives
The export acceleration is arguably the cleanest structural positive in the result. Higher sales outside Pakistan reduce dependence on a single end-market and can support utilization of the enlarged Nooriabad platform. The company’s product mix remains overwhelmingly wires and cables, so diversification here is geographical rather than a shift into an unrelated business. Annual Report 2026
Nooriabad should also be assessed through actual unit economics rather than capacity statements alone. The facility adds higher-voltage manufacturing and more integrated inputs, but FY2026 gross margin stayed flat. That means the financial evidence does not yet demonstrate a step-change in gross profitability from the new footprint. Future results should show whether utilization, product mix and manufacturing efficiency can convert the capital invested into higher operating returns. Annual Report 2026
Sector and peer context
Pakistan’s overall large-scale manufacturing index grew 4.98% in FY2026, according to PBS. Pakistan Cables’ 16.2% revenue growth therefore outpaced the broad manufacturing recovery, although LSM is only a rough context measure for a cable producer and should not be treated as a direct demand proxy. PBS June 2026 QIM
A peer check also shows that the sector backdrop alone does not explain Pakistan Cables’ margin pattern. PSX data for Fast Cables shows FY2026 sales growth of about 21.5% and gross margin rising to 18.68% from 16.87%. Product mix, customer mix and standardized data presentation differ, so this is not a like-for-like profitability benchmark. It does, however, reinforce the need to treat Pakistan Cables’ flat 10.4% gross margin as a company-specific issue to monitor rather than assuming it was inevitable across the whole cable industry. Fast Cables — PSX
Recurring versus exceptional earnings drivers
The more repeatable positives are the larger revenue base, stronger exports, a completed manufacturing transition, and potentially lower financing cost if the company can maintain access to cheaper export/refinance facilities and reduce working-capital borrowing. These factors can persist, but they still need to produce better gross margins and cash conversion to strengthen earnings quality.
The less repeatable items are clearer. The Rs320.2 million discounting gain on the Sindh cess settlement is not normal trading income. Gains associated with disposal of old assets should not be annualized. The much larger associate contribution is also unlikely to remain part of the recurring earnings base if the CECL stake is sold, while the FY2026 tax charge includes unusually heavy prior-year/minimum-tax effects. Future comparisons should therefore focus on core operating profit, cash flow and finance cost before treating the FY2026 bottom line as a clean new run-rate. Annual Report 2026
What to monitor next
- Gross margin: the first test is whether 10.4% becomes a floor and improves as Nooriabad utilization rises, or whether copper/aluminium volatility, competition and product mix keep margins compressed.
- Receivables and cash conversion: trade debts increased much faster than sales. A reversal would improve earnings quality quickly; another large build would keep the company dependent on borrowing.
- Short-term debt and the Rs4 billion Sukuk: finance cost fell in FY2026, but the funding base remains large and short-dated. Refinancing requirements and the ability to convert working capital back into cash are central to the next cycle.
- Associate exit: CECL contributed materially to FY2026 pre-tax profit. Completion of the proposed buyback would turn the investment into cash, but future results would no longer receive the same share of associate earnings.
- Export momentum: exports grew much faster than local sales. Sustaining Africa and newer geographic markets would improve utilization and diversify demand; any reversal would put more pressure back on the domestic construction and utility cycle.
- Nooriabad efficiency: the new manufacturing base is now operational. The next evidence to watch is not capacity language but measurable improvement in gross margin, operating cash generation and return on capital.
- Tax normalization: FY2026’s 71.8% effective tax rate was unusually high. The next result should reveal how much of the tax drag was transitional versus structurally recurring.