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Packages’ net profits injured by higher finance cost

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March 13, 2020 (MLN): Packages Limited (PKGS), the largest flexible packaging company, has announced its financial results for the year ended on December 31, 2019, as per which, the company has posted its net profits of Rs 278 million (EPS: Rs4.82), showing a massive decline of 76%  against the last year profits of Rs 1.16 billion. (EPS: 10.34)

The decline in profitability was mainly attributed to higher financial charges.

As per the financial statement of the company, the cost of sales went up by 9.8%, but more than an increase in net sales (up by 15%) made the gross profits increased to Rs. 10 billion, up by 51.16% YoY.

On the cost front, the distribution cost, administrative expenses jumped by 10.76% YoY and 6.75% YoY respectively whereas other expenses soared by 1.92 times YoY which restricted the company’s bottom line.

Further damage was done by whopping finance cost which increased by 75.3% YoY, from Rs 2.26 billion to Rs 3.97 billion owing to higher borrowings with higher interest rates, keeping the profitability of the company in check.

Alongside the financial results, the board of directors has recommended al cash dividend for the year ended Dec 31, 2019, at the rate of 120% i.e. Rs 12 per ordinary share of Rs 10.

Moreover, the company has resolved to consummate the transfer of Converting Business to Packages Converters Ltd.

Financial Results for the year ended December 31, 2019 ('000 Rupees)




% Change





Cost of sales and services




Gross profit




Administrative expenses




Distribution and marketing costs




Net Impairment losses on financial assets



Other expenses




Other income




Profit from operations




Finance cost




Investment income




Share of net profit of associated and joint ventures accounted for using equity method




Profit before taxation








Profit for the period




Basic earnings per share (Rupees)





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Posted on: 2020-03-13T16:12:00+05:00