EcoPak suffers declining margins due to subdued growth of blowing/bottles business: PACRA

May 8, 2019: Pakistan Credit Rating Agency (PACRA) has maintained the entity ratings of EcoPak Limited at ‘BBB+’ for long-term and ‘A2’ for short-term. The outlook assigned to the ratings is ‘stable’. These ratings reflect the Company's established position in PET Preform and PET Bottle segments.

According to a report issued by PACRA, EcoPack has experienced a rising top-line owing to significant demand growth in PET Preform segment and its increased share in revenues. However, seasonality has subdued the growth of Blowing/Bottles business. This has led to an overall decline in margins percentage, as PET Preforms is relatively a lower margin and high volume segment. The Company's overall leveraging remain significant with stable coverages. Sound working capital management lend support to financial profile.

The ratings are dependent on the management's ability to strengthen the relative positioning of the Company in the industry. Improvement in business margins and, in turn, profitability remains imperative. Any deterioration in the Company’s coverages would have negative impact on the ratings.

Copyright Mettis Link News