PACRA maintains MACPAC Films' Ratings with Stable Outlook

December 18, 2024 (MLN): Pakistan Credit Rating Agency Limited (PACRA) has maintained ratings of MACPAC Films Limited (PSX: MACFL) remain the same at “BBB+” for the long term and “A2” for short term with a stable outlook forecast, latest press release issued by PACRA showed.

The ratings reflect MACPAC Films Limited's strong position in the Biaxially Oriented Polypropylene (BOPP) segment.

The company's success is attributed to its focus on customer relationships, strong corporate governance, ethical practices, employee dedication, and alignment with the broader ESG agenda.

During FY24, the country's manufacturing industry grappled with high energy costs and heightened inflation, which increased the cost of sales and impacted gross profit margins.

MACPAC was not immune to these challenges.

Despite economic headwinds, MACPAC preserved its market share by prioritizing quality and customer retention, ensuring stability.

The sales strategy emphasizes optimizing the domestic sales mix while exploring export opportunities.
The Company's production volumes experienced a marginal 1.3% decline during FY24.

Product utilization of the Company is mainly linked with foods and consumer products. However, the Company maintained an 80% capacity utilization rate in FY24.

During FY24, MACPAC's topline grew slightly by 2%, reaching Rs5.6bn (FY23:Rs 5.5bn; 3MFY25: Rs1.4bn).

However, gross profit margins declined by 29% to 16.5% from 23.8%, primarily due to heightened energy costs.

Net profitability stood at Rs257mn (FY23: Rs379mn; 3MFY25: Rs7mn).

To mitigate profitability challenges, the Company is transitioning to solar energy and focusing on cost-effective products in the BOPP market.

To manage exchange rate risks from imported raw materials, the Company has built sufficient inventory to meet customer demand efficiently and cost-effectively.

MACPAC maintained a healthy leveraging of 15.9% as of June 2024 (June 2023: 13.6%; 3MFY25: 15.7%), supported by efficient working capital management through advance terms with debtors and renegotiated terms with suppliers.

Equity was reported at Rs2.1bn (FY23: Rs1.8bn).

Additionally, MACPAC partnered with The Green Ark Sustainability (Pvt.) Limited (TGA) to further its ESG initiatives by offering recycling solutions for post-industrial and post-consumer plastic waste.
The ratings are dependent upon the Company’s ability to sustain its healthy business profile amidst strong competition, while, effective and prudent management of financial risk indicators remains important.

Moreover, upholding of governance framework is vital.

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