MERIT climbs back to profit in 9MFY26

April 29, 2026 (MLN):  Merit Packaging Limited (PSX: MERIT) reported a significant financial turnaround for the nine months ended March 31, 2026, swinging from a net loss of Rs169.55m in the previous year to a net profit of Rs80.55m.

Reflecting this dramatic recovery, the company's basic and diluted earnings per share (EPS) turned positive, recording Rs0.40 compared to a loss per share of Rs0.85 in 9MFY25.

However, this bottom-line profitability completely masked a severe contraction in the company's core operations.

MERIT’s top-line revenue plunged by 44% year-on-year, falling to Rs2.54bn from Rs4.50bn.

The cost of sales also dropped, but at a slightly slower pace of 42%, settling at Rs2.46bn.

Because of the massive drop in sales volume, the company’s gross profit collapsed by 67%, shrinking to just Rs80.42m down from Rs244.23m last year.

On the operational front, the company actively trimmed its overheads.

General and administrative expenses were reduced by 3% to Rs131.52m, while selling and distribution expenses were slashed by 24% to Rs65.47m.

Other income also grew by 45% to Rs25.33m.

Despite these savings, the sheer drop in gross margins plunged the company into an operating loss of Rs109.31m, completely reversing the Rs28.42m operating profit recorded in 9MFY25.

The absolute catalyst that rescued MERIT's financials was a massive, one-off "Gain on disposal of assets classified as held for sale" amounting to Rs505.66m.

This extraordinary injection of capital, combined with a 44% reduction in financial charges (which dropped to Rs78.75m), instantly catapulted the company out of the red.

As a result, the profit before income tax and minimum tax differential stood at Rs317.6m, a massive turnaround from the Rs112.95m loss last year.

After accounting for a slightly lower minimum tax levy of Rs53.99m, the profit before taxation settled at Rs263.61m.

The company did face a heavy new taxation expense of Rs183.06m, but the enormous asset disposal gain allowed Merit Packaging to securely close the nine-month period in the green with a final net profit of Rs80.55m.

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