PACIFICTEXTILES (01382) expects interim profit attributable to shareholders of approximately HK$1 million to HK$10 million.

PACIFICTEXTILES (01382) announced that the Group expects profit attributable to equity holders of the Company for the six months ended September 30, 2026 (the Reporting Period) to be approximately between HK$1 million and HK$10 million, compared with profit attributable to equity holders of the Company of approximately HK$79.3 million for the six months ended September 30, 2025 (the corresponding period of last year). The decline during the Reporting Period was caused by a number of factors, primarily due to: A decline in gross profit margin. The ongoing US-Iran war in the Middle East has intensified inflationary pressures, causing electricity and raw material prices, particularly yarn and chemicals, to surge sharply, thereby driving up the Group's production costs. Meanwhile, there was a time lag in negotiating and adjusting selling prices with customers, which failed to fully offset the increase in production costs, resulting in a decline in the Group's overall gross profit margin during the period from April to August 2026. In addition, during the selling price negotiations, some customers deferred or slowed down placing orders, which led to a weakening of order demand and sales revenue during the period from April to August 2026; and An increase in exchange losses. Compared with exchange losses of approximately HK$8.9 million recorded in the corresponding period of last year, exchange losses of approximately HK$25.6 million were recorded during the Reporting Period, mainly arising from the appreciation of the Renminbi. More than 90% of the exchange losses related to the revaluation of intercompany current accounts between the Group's subsidiaries in China and Hong Kong, which revaluation does not affect the Group's cash flow. Notwithstanding the above, management remains confident in the Group's prospects. The Company recorded positive EBITDA (earnings before interest, tax, depreciation and amortization) of approximately between HK$160 million and HK$169 million during the Reporting Period, and the amount after excluding the impact of exchange losses from EBITDA was approximately between HK$186 million and HK$195 million. Meanwhile, with the completion of selling price adjustments with customers, with selling prices adjusted to the maximum extent practicable, the Group's gross profit margin and order volume both improved in September 2026. Based on the current progress schedule, the Group expects to complete the capacity expansion of its Vietnam factory by the end of 2027, after which the Group expects to be able to more effectively meet order demand from US customers from 2028 onwards. Immediately following the completion of the Vietnam expansion, the Group expects its capital expenditure to decrease significantly, thereby releasing surplus cash flow to repay bank borrowings and consequently reduce interest expenses. In addition, in order to reduce operating costs and enhance the operating efficiency of its Nansha factory in China, management has begun to consider and has initiated an assessment aimed at further improving its asset structure, which may involve the sale of certain underutilized land and factory properties at an appropriate time. Meanwhile, leveraging the successful promotion of its home textile business in the domestic China market, sales of that business in the first half of the financial year ending March 31, 2027 have doubled compared with the first half of the financial year ended March 31, 2026, and the Company hopes to expand the scale of its home textile business to target a global customer base.