PABC eying new customers in South Asia, Central Asian states, Africa and Middle East

May 12, 2022 (MLN): Pakistan Aluminium Beverage Cans Limited (PABC), Pakistan’s first solo Aluminium beverage can manufacturer, is exploring new customers in the regions of South Asia, Central Asian states, Africa and the Middle East to increase exports growth, management said while holding a corporate briefing session with investors.

“The overall exports outlook is positive and management is eying new customers, one more international market will be added in the next quarter,” the company said.

According to the key takeaways by AHL, the management expects that CY22 volumes can exceed sales of CY21 as the Afghanistan situation has improved and payment issues have largely been dealt with (cash payments now). 1Q sales have already shown growth on a YoY basis (sales were made to Afghanistan as well as Bangladesh).

Growth in the local market is expected at 7-8% whereas exports growth remains robust too as new customers are being added. Sales to Afghanistan will be majorly supported by sales to new client ‘Alokozay’. The management forecasts demand from the regional market at nearly 1bn cans per annum.

Pakistan demand includes can size of 250ml and 300ml, 250ml is the main pack size which contributes 91% to the local sales. In Afghanistan, though 250ml has the major market share but 300ml is also a sizeable pack which contributes around 47%. Overall total demand for 250ml makes the biggest pie (76.9%) followed by 300ml size (22.2%), 330ml (0.2%) and 355ml (0.6%; to USA/Canada).

The company’s local sales form 60% of total offtake and the remaining 40% is that of exports. Of exports, 35% of sales are made to Afghanistan and the remaining 5% to other international markets. Moreover, a price hike in aluminium is usually passed on easily as per contracts. Management did highlight that aluminium did come down a little in the past few days. The company procures 5000-6000 tons per annum.

On the production front, management apprised that cans production climbed up from 434mn in CY20 to 545mn in CY21. Sales in the last quarter of the outgoing year were down due to peak winter in the North region of Pakistan as well as in Afghanistan. 40% of the offtake is made to Afghanistan where sales went up despite the change in regime (+5.4% YoY), while the company also managed to increase overall offtake as it diversified the risk and added two more markets (Tajikistan and Bangladesh).

GP margins improved to 35.5% from 30.3% last year amid improved efficiency and pricing during the year, the management said, quoted AHL.

Management said that improvement was also witnessed in the leverage position compared to previous years as the debt-to-equity ratio increased by 1.16x compared to 1.45x last year, AHL reported.

The company has invested $8mn which will augment capacity from 700mn cans to 950mn cans. This should come online by Jun’22, the management believes. Utilization of the plant went up from 74% to 91% hence showing that the expansion was taken on a timely basis.

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