MERIT rebounds to Rs124m profit in FY26

September 30, 2026 (MLN): Merit Packaging Limited (PSX: MERIT) staged a dramatic turnaround for the fiscal year ended June 30, 2026, reporting a net profit of Rs123.64m compared to a net loss of Rs599.67m in the preceding year.

Reflecting this sharp operational recovery, basic and diluted earnings per share (EPS) turned positive at Rs0.62, up from a loss per share (LPS) of Rs3.00 in FY25.

The primary catalyst behind the turnaround was a multi-fold surge in non-operating income, cost rationalization, and lower debt-servicing outlays, which successfully offset a top-line revenue decline.

Net revenue fell 35% year-on-year to Rs3.43bn, down from Rs5.28bn in FY25. However, direct cost of sales contracted by 37% to Rs3.37bn, enabling gross profit to turn positive at Rs59.58m (reversing a gross loss of Rs28.73m in FY25).

On the operational front, overhead expenses were tightly managed.

General and administrative expenses fell 10% to Rs192.70m, while selling and distribution expenses dropped 28% to Rs89.62m.

After absorbing an expected credit loss allowance of Rs6.50m and other operating expenses of Rs23.75m, operating performance was heavily boosted by a surge in "other income" (rising to Rs591.78m from Rs27.80m), pushing operating profit to Rs338.80m (reversing an operating loss of Rs350.30m).

Below the operating line, MERIT gained significant relief on borrowing charges. Financial charges dropped 47% to Rs97.21m (down from Rs183.07m in FY25).

Driven by gross margin gains, lower finance charges, and massive non-operating income, profit before taxation reached Rs193.40m (supported by statutory levies of Rs48.20m).

The company absorbed a corporate taxation charge of Rs69.76m for the year. Supported by a gross margin recovery, a surge in non-operating income, and a 47% reduction in financial charges, Merit Packaging Limited securely closed the fiscal year in the black with a net profit of Rs123.64m

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