PKGS: Profits bolstered by 4.6x YoY

August 26, 2021 (MLN): Packages Limited (PKGS)’s net profits during 1HCY21 clocked in at Rs2.95bn, which was 4.6x YoY higher than the net profits of Rs642.29mn earned during same period last year.

In line with the profits, the earnings per share of the company depicted a huge jump from Rs7.49/sh to Rs30.95/sh.

Packages Limited is operating as a Holding Company and derives value for its shareholders from its equity participation in IGI Holdings Ltd. (10.61%), Nestle Pakistan (8.05%), and Tri-Pack Films (33.33%), Packages Convertors (100%), Packages Real Estate (75.16%), DIC Pakistan (54.98%), Packages Lanka (79.07%), Anemone holdings (100%), Bulleh Shah Packaging (100%), and Omya Pack (50%).

The exponential rise in bottom-line is mainly attributed to higher dividend income, rental income and lower finance cost.

To note, PKGS had transferred manufacturing operations includes Folding Cartons, Flexible Packaging, and other consumer products to a newly formed wholly owned subsidiary, Packages Convertors Limited. Post-restructuring, the revenues of the Holding Company mainly comprise of dividend income and rental income.

During the period company’s revenues jumped by 25.6% YoY to Rs39.3bn, while it’s cost of sales surged by 21.42% YoY to Rs30.5bn. As a result, the gross profit margin increased from 20% to 22%.

With regards to major expense heads, the company encountered a 9.4% YoY rise in its administrative expenses, while distribution and marketing expenses saw a slight increase of 6% YoY.

Other significant changes during the period under review include a 21% decline in non-core expenses and a 91.7% YoY improvement in other income, both of which helped in boosting the earnings of the company.

Moreover, the company also booked Rs16.89mn as investment accounted for using the equity method, compared to Rs47.7mn in 1HCY20.

Meanwhile, finance cost witnessed a drop by 39.5% YoY mainly due to the transfer of a major portion of finances under mark-up arrangements to Packages Converters Limited as a result of the demerger. Moreover, the low-interest rates and lesser short-term borrowings have also been the contributors behind the drop in finance cost.

On the tax front, the company incurred an effective tax rate of 37%, declined considerably by 12ppts from 47% in SPLY.

Financial Results for the Half year ended June 30, 2021 ('000 Rupees)

 

Jun-21

Jun-20

% Change

Revenue from goods and services

                  39,346,688

                       31,312,031

25.66%

Cost of sales

                (30,569,805)

                     (25,176,869)

21.42%

Gross profit

                     8,776,883

                         6,135,162

43.06%

Administrative expenses

                  (1,314,568)

                       (1,200,993)

9.46%

Distribution and marketing costs

                  (1,406,968)

                       (1,323,341)

6.32%

Reversal of impairment losses /(net impairment losses) on financial assests

                           16,898

                           (138,869)

 

Other expenses

                      (445,183)

                           (564,448)

-21.13%

Other income

                        237,595

                             123,903

91.76%

Profit from operations

                     5,864,657

                         3,031,414

93.46%

Finance cost

                  (1,191,145)

                       (1,970,018)

-39.54%

Investment Income

                                    –  

                             153,267

-100.00%

Share of profit/(loss) of investment accounted for using equity method- net of tax

                           44,961

                               47,763

-5.87%

Profit before taxation

                     4,718,473

                         1,262,426

273.76%

Taxation

                  (1,763,528)

                           (620,130)

184.38%

Profit for the period

                     2,954,945

                             642,296

360.06%

Basic earnings per share (Rupees)

                             30.95

                                    7.49

313.22%

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Posted on: 2021-08-26T16:25:00+05:00

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