Can producer’s profit soars to Rs387m

Spike comes in wake of surge in sales, decline in finance cost


Our Correspondent July 31, 2021

KARACHI:

Pakistan Aluminium Beverage Cans’ (PABC) profit skyrocketed to Rs387 million during the quarter ended June 30, 2021 compared to Rs16 million in the same period of last year.

The jump came on the back of a modest spike in sales and considerable decline in finance cost.

Accordingly, the earnings per share of the can-maker rose from Rs0.04 in April-June 2020 to Rs1.07 in April-June 2021, showed a notification sent by the company to the Pakistan Stock Exchange on Friday.

During the quarter, the company recorded an 81% rise in sales, which swelled from Rs1.1 billion in the April-June period of last year to Rs1.9 billion in the three months under review.

“Sales of the can producing company nearly doubled as they inched closer to Rs2 billion,” said Topline Securities analyst Sunny Kumar while talking to The Express Tribune. “Similarly, margins of the company rose from 22% to 40%.”

At its initial public offering (IPO) in June 2021, the company forecast margins of 33%.

It may be due to the seasonal effect because “consumption of soft drinks jumps in the summer season as restaurants purchase them in huge quantities”, the analyst said.

“Another reason behind the surge in sales was that eateries were closed at the same time last year, hence the jump in sales was also witnessed due to the low base effect,” he said.

“Export of cans was also suspended during the same period last year, which reduced the base effect further.”

He pointed out that prices of a few commodities such as raw material utilised by the company were low, which also worked in favour of the can-maker.

According to him, economies of scale also played a huge role in boosting sales.

Selling and distribution expenses of the company rose 66% to Rs30.9 million in the second quarter of 2021. The firm had recorded expenses of Rs18.6 million under this head in the same period of last year.

Other operating income fell from Rs4.5 million in the April-June quarter of 2020 to Rs4 million in the three months under review, a decline of 10.9%.

Other operating expenses soared to Rs205.9 million in the April-June 2021 quarter from Rs8.7 million in the corresponding quarter of previous year.

The firm’s finance cost declined from Rs132.3 million in the second quarter of 2020 to Rs79.5 million in the same quarter of 2021.

“Finance cost of the company decreased 40% because it retired loans,” the analyst said.

Published in The Express Tribune, July 31st, 2021.

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