Kohinoor Textile Mills Expands Focus on European Buyers
Kohinoor Textile Mills Limited (KTML) is shifting away from volume-driven orders from US retailers towards European buyers seeking specialised, labour-intensive textile products. The strategy is aimed at improving margins by prioritising higher-value manufacturing over competing primarily on price.
The shift is reflected in the company’s export mix. Europe accounted for 56% of KTML’s exports in FY26, compared with 50% a year earlier. Meanwhile, the US share declined to 34% from 42% over the same period.
The changing distribution highlights the company’s growing focus on European brands that require specialised production capabilities and more value-added home textile products.
Higher Labour Content Supports Better Margins
KTML is targeting European brands whose orders require dedicated sewing, finishing and other specialised production skills, rather than relying heavily on generic homewear supplied to large US retail chains.
These products typically involve a greater labour component relative to raw materials, potentially allowing the company to capture stronger margins through specialised manufacturing.
Pakistan’s cost advantage in skilled textile labour also provides an opportunity to compete with other manufacturing destinations. KTML is seeking to capitalise on this advantage by moving up the value chain and supplying products that require greater technical expertise.
The strategy represents a shift towards product differentiation and specialised manufacturing, allowing the company to focus on the value it adds rather than relying exclusively on large order volumes.
Home Textile Margins Improve as Earnings Rise
KTML’s financial performance reflects the contribution of its home textile business. Revenue from the segment increased by 6% during FY26, while its gross margin improved to 22.5%, compared with 19.9% a year earlier.
The company’s consolidated earnings rose 18% to Rs19.9 billion, equivalent to Rs14.77 per share. Lower power and finance costs also supported the improvement in profitability.
Although revenues from spinning and weaving declined modestly, stronger contributions from home textiles and subsidiaries more than offset the weakness in those businesses.
For FY27, management expects core revenue to grow by 3–5%, with margins remaining stable. The outlook indicates that the company intends to build on its higher-value product strategy while maintaining profitability.
Lower Energy Costs Strengthen Competitiveness
Energy efficiency is another important element of KTML’s strategy. The company’s average power cost declined by 9% to Rs27.9 per unit as it increased its reliance on electricity from the national grid.
KTML is also expanding its energy infrastructure to reduce costs further. A 48.36 MW battery storage system and an additional 9.34 MW solar plant are scheduled for completion by December 2026.
Following these additions, solar energy’s share of the company’s power mix is expected to increase from 23% to 32%. The planned investments are projected to generate annual savings of approximately Rs600 million.
Lower electricity costs could help KTML preserve margins while allocating resources towards specialised European orders and more labour-intensive manufacturing processes.
KTML’s European Strategy Targets Long-Term Profitability
KTML’s changing export mix reflects a broader effort to strengthen its competitive position in international textile markets. By increasing its exposure to European buyers, the company is targeting customers that value specialised production, skilled labour and higher-value products.
Improved home textile margins, lower energy costs and investments in battery storage and solar power could support the strategy as the company enters FY27.
Management’s expected revenue growth of 3–5% and stable-margin outlook will depend on sustaining demand, maintaining production efficiency and converting its specialised manufacturing capabilities into profitable export orders.
The transition suggests that KTML is placing greater emphasis on margin quality and value addition rather than pursuing growth through volume alone.