LAHORE - Textile sector of the country has depicted strong earnings growth of 23 per cent in first half of fiscal 2009. Analysts said that composite sector, which accounts for approximately 67per cent of the entire textile sector market capitalization, posted a remarkable earnings growth of 61per cent. Moreover, weaving sector came back into profits whereas the spinning sector plunged into losses when compared to the corresponding period last year. In the report a sample of 24 companies from the composite sector, 6 weaving companies and 31 spinning units representing 92 per cent, 95 per cent and 80 per cent market capitalization of their respective sectors, was used for analysis. Analyst, Atif Zafar observed that amid rise in export based revenue due to depreciating rupee (21per cent in 1HFY09), net sales of the textile sector jumped by 22per cent to Rs127 billion. This resulted in improved margins, which rose by 377bps despite high cotton prices (up 21per cent) during the period. However, a 100per cent increase in financial cost to Rs12.4bn brought down earnings to Rs3.4bn, still up by 23 per cent YoY. Financial cost rose on the back of higher borrowing rates as 6-month KIBOR during the period averaged 14.59per cent, up 458bps. Composite sectors impressive earnings growth of 61 per cent was largely driven by improving gross margins which increased by 451bps. Due to its export orientation, depreciating rupee boosted rupee based revenue of the sector which increased by 26per cent to Rs84bn. Its impact on the bottomline was however impaired by 105per cent increase in finance cost to Rs8.5bn. Weaving sector which was in losses in 1HFY08, recovered to post earnings of Rs52mn. The sector benefited the most from jump in gross margins which were up by 538bps. Financial cost of Rs485mn, up 43per cent from last year however diluted earnings of the weaving sector. In 1HFY09, spinning sector plunged into losses of Rs783mn as against profits of Rs343mn in the corresponding period last year. Though gross margins rose by 152bps, 102pc rise in financial cost dragged the earnings of the spinning sector in to the red zone.