Back in the game: Packages Limited in the black

Packaging giant earns Rs1 billion in Jan-Sept period.

KARACHI:

Packages Limited boosted its revenues by a third, turning from loss to profit, year-on-year basis, in nine months ended September 2013, according to the company’s financial results, which, a market analyst says, are almost flat.

The packaging giant, according to a notice sent to the Karachi Stock Exchange on Friday, posted an after-tax profit of Rs1 billion or Rs11.91 per share for the first nine months of 2013, turning around after a loss of Rs1.7 billion or Rs21.41 per share in the corresponding period of 2012.

The manufacturer of famous Rose Petal Tissue products has increased its revenues to Rs11.56 billion, up by 33% compared with Rs8.66 billion in the nine months of 2012.

“The nine-month results are almost flat when we look at the company’s profit from operations,” said Syed Nasir Abbas Rizvi, an analyst at Elixir Securities. Revenues have increased with a slight rise in gross margin, he said, but other costs have increased too, offsetting the gains in the bottom line.

The company’s profit from operations increased to Rs759 million, up 8% from Rs701 million earned in the same period last year.

Finance cost has increased 69% to Rs641 million compared with Rs379 million in the same period last year, Rizvi said. Administrative expenses have almost doubled, marketing and distribution costs have also doubled. All of this combined has resulted in a flat result, he said.

A joint venture between the Ali Group of Pakistan and Akerlund and Rausing of Sweden, Packages claims to be the only facility in Pakistan offering a complete range of packaging solutions including offset printed cartons, shipping containers and flexible packaging materials to individuals and businesses worldwide.

The company supplies packaging material to tobacco, food, soap and detergent, pharmaceutical, match and shoe industries. Its clientele includes big names like Anglo-Dutch food and consumer goods giant Unilever and the country’s largest cigarette manufacturer Pakistan Tobacco Company (PTC).

The growth of packaging companies, according to market analysts, is closely tied to that of their clients. PTC, one of Packages’ clients, alone more than doubled its profit, earning more than Rs10 million a day, and increased revenues by nearly a fifth for nine months ended September 2013.

In terms of quarterly performance, the company earned Rs165 million or Rs1.96 per share in after-tax profit during the third quarter of 2013 against a loss of Rs2 billion or Rs24.87 per share in the same quarter of 2012.

“If we want to look at the clients’ impact on the company’s profit, we have to look at its profit from operations,” said Rizvi.

The company has reported a loss of around Rs9 million during the quarter, he said, as profit from operations decreased to Rs193 million compared with Rs202 million in the same quarter of last year.

Published in The Express Tribune, October 27^th, 2013.

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