Can maker plans expansion

Aims to meet growing consumer demand for aluminium cans

KARACHI:

In a significant development for Pakistan’s manufacturing industry, a prominent beverage can producer has announced plans to expand its production capacity, fuelled by an increase in exports.

Pakistan Aluminium Beverage Cans (PABC), the largest and exclusive beverage can manufacturer in Pakistan, is set to enhance its production capacity following a surge in demand, the company revealed in a recent corporate briefing.

The can-maker registered an impressive utilisation rate of 88% in calendar year 2022, up from 78% in CY21. In August 2022, PABC increased its capacity by 150 million cans, taking total annual capacity to 950 million cans and aiming to further augment it to 1.2 billion cans.

In CY20, the company’s share of exports in total sales was 39%, which fell to 37% in CY21. However, it rose to 42% in CY22, JS Global analyst Waqas Ghani Kukaswadia told The Express Tribune.

PABC’s management announced that necessary machinery for the expansion had already been imported, he said. “The primary objective of the expansion is to meet the growing consumer demand for aluminium cans and it is expected to be completed by August 2023.”

The management disclosed that the company could potentially increase production capacity to around 2.5 billion cans per year at its existing facility in Faisalabad. It is no longer required to provide 100% cash margin for raw material imports, since the condition has been relaxed.

The can-maker anticipates sales volumes of 750 million cans in CY23, with estimated revenues of Rs18 billion and net profit of Rs3.5 billion.

Despite facing economic challenges arising from the domestic and global geopolitical factors, the beverage can producer has maintained a robust growth trajectory. In CY22, it achieved revenue of Rs14.2 billion, marking a significant year-on-year increase of 96%, Kukaswadia added.

PABC has also benefited from the rupee depreciation with over 40% of revenue coming from exports and the remaining from the domestic market.

However, gross profit came under some pressure as margins reached 33.4% in CY22, a decrease of 2.1 percentage points compared to CY21. Nonetheless, the company’s after-tax profit stood at Rs2.7 billion in CY22, demonstrating a year-on-year rise of 71%.

Besides, the strong growth momentum continued into the first quarter of CY23, when the bottom-line expanded 2.2 times year-on-year, resulting in a net profit of Rs1.3 billion, he said.

Published in The Express Tribune, May 30^th, 2023.

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