KARACHI, Oct 26 (Focus Pakistan) — Systems Limited sold far more in the third quarter. It earned less from its core business. Sales hit Rs26.78 billion, up nearly 30%, according to the Systems Limited Q3 2026 results. Operating profit, meanwhile, dropped 7.5% to Rs3.20 billion. Thinner margins and heavier costs ate up most of the gain.
That contrast defines the quarter. Revenue climbed 29.5% from a year earlier. Gross profit rose just 6.6% to Rs6.63 billion. Operating profit went the other way entirely.
Net profit still grew 8.7% to Rs3.03 billion, or Rs1.98 a share. Against April-June, though, it barely moved, extending a run of quarters parked near the Rs3 billion mark.
Two regions carry the load
The Middle East and North America drove the top line, growing 26% and 41% respectively. The Gulf business kept expanding despite the regional geopolitical turmoil.
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Confiz played a major part in the North American jump. Systems agreed to acquire the global technology firm, which specialises in retail and consumer goods digital transformation, in December 2025. The company structured the deal as a share-swap transaction, and the Lahore High Court sanctioned the merger on May 6, 2026, with effect from January 1. Systems has not, however, broken out how much of North America’s 41% growth came from Confiz rather than its existing operations there.
Here lies the trouble. Out of every Rs100 in sales, Systems now keeps less than Rs25 as gross profit. A year ago, it kept about Rs30.
Gross margin fell to 24.8% from 30.1%. Had Systems held last year’s margin on this quarter’s sales, it would have booked roughly Rs8.06 billion in gross profit about Rs1.43 billion more than it actually did, by Focus Pakistan’s calculation.
Most regions saw margins narrow from a year earlier, with North America at 25%, Europe at 39%, the Middle East at 23% and Asia Pacific at 38%.
The domestic segment stood out. Its gross margin widened to 21% from 16% a year earlier, providing a rare bright spot in an otherwise challenging regional margin picture.
Costs climb on every front
Systems Limited spent aggressively to win business. Selling and distribution costs rose 26% year-on-year to Rs966 million as the company pushed into all its markets at once.
Borrowing got pricier too. The company paid Rs195 million in finance costs, almost two and a half times last year’s bill and 12% more than in April-June. Short-term loans explain most of it.
The balance sheet shows the strain. Short-term borrowings swelled 78.6% to Rs10.64 billion between December and September. Over the same nine months, cash and bank balances shrank 22.9% to Rs10.41 billion. Debt now outweighs the cash pile as the company keeps expanding abroad.
Operating profit also slipped from the roughly Rs3.42 billion Systems reported for April-June.
Cushions soften the blow
So how did net profit rise while operating profit fell? Two things helped. Other income climbed to Rs367 million, about Rs141 million or 62% more than in April-June. It did so even as the stronger rupee left the company nursing exchange losses.
The taxman also took a smaller bite. Systems paid an effective rate of 10%. It paid 11% a year ago and 13% last quarter.
The nine-month picture keeps the quarter in perspective. January-March brought in about Rs3.03 billion. April-June delivered Rs3.02 billion. With the latest Rs3.03 billion, the nine-month total comes to Rs9.08 billion, 14.4% above last year’s.
Profit, in other words, still grows year-on-year. It has simply stopped climbing quarter by quarter, even as revenue races ahead.
The fourth quarter will test whether Systems can turn its enlarged footprint into stronger operating earnings, or whether thinner margins, rising borrowing and costly expansion will keep the gap between sales and profit wide open.
