Citi Pharma Limited (PSX: CPHL) reported stable earnings for the first quarter of fiscal year 2026, with its profit after tax standing at Rs203.69 million, up 1% year-on-year from Rs201.50 million in the corresponding quarter of FY25. The company’s earnings per share (EPS) remained virtually unchanged at Rs0.89, compared to Rs0.88 a year earlier, underscoring steady operational performance amid cost pressures and rising finance expenses.
According to the company’s financial results for the quarter ended September 30, 2025, Citi Pharma’s net sales increased by 5% year-on-year to Rs3.37 billion, up from Rs3.22 billion in 1QFY25. The steady top-line growth reflected consistent demand across its pharmaceutical and chemical divisions, supported by improved distribution efficiency and sustained market presence.
The cost of sales during the quarter rose modestly by 2% to Rs2.85 billion compared to Rs2.80 billion in the same period last year. As a result, the company’s gross profit climbed 21% to Rs518.97 million from Rs428.51 million, while the gross margin improved significantly to 15.4% from 13.3%. This margin expansion was attributed to enhanced production efficiency, better procurement management, and optimized raw material utilization.
Operating expenses, however, saw an uptick as the company continued to invest in growth and market expansion. Administrative and general expenses increased by 8% to Rs50.19 million from Rs46.40 million, while marketing and distribution expenses surged by 19% to Rs48.43 million from Rs40.70 million in the corresponding period. The overall operating expense subtotal reached Rs98.62 million, up 13% year-on-year, reflecting higher promotional spending and inflationary impacts on operational costs.
Despite the expense escalation, Citi Pharma managed to deliver a 23% increase in operating profit, which rose to Rs420.36 million from Rs341.42 million in 1QFY25. This improvement highlighted the company’s strong operational leverage and ability to sustain profitability even amid challenging cost conditions.
However, the company’s financial charges more than doubled, jumping 88% to Rs121.19 million from Rs64.57 million last year. The sharp rise in borrowing costs was largely due to elevated interest rates and higher working capital requirements to support inventory and expansion-related activities. Additionally, other income declined sharply by 69% to Rs28.79 million from Rs92.22 million, largely due to lower investment and non-core income.
Profit before taxation fell 11% year-on-year to Rs302.28 million compared to Rs340.29 million in the previous year’s same quarter. Nevertheless, Citi Pharma benefitted from a significant reduction in tax expense, which declined 29% to Rs98.59 million from Rs138.80 million. This tax relief helped offset the impact of higher finance costs and weaker non-operating income, enabling the company to maintain its net profit at last year’s level.
The company concluded the quarter with a net profit margin of 6%, only slightly lower than the 6.2% margin reported in the same period last year. While bottom-line growth remained modest, Citi Pharma demonstrated solid operational fundamentals and disciplined cost management, positioning itself for continued stability amid a volatile macroeconomic environment.
Citi Pharma’s consistent earnings performance underscores its strategic focus on manufacturing efficiency, controlled cost structure, and maintaining a balanced portfolio between its pharmaceutical formulations and bulk drug manufacturing segments. The company continues to expand its production capacity and improve value addition, aligning with its long-term growth objectives in Pakistan’s healthcare and industrial chemical sectors.
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