Ecopack Limited

Ecopack Limited (PSX: ECOP) is incorporated in Pakistan as a limited liability company. The company is engaged in the manufacturing and sale of Polyethylene Terephthalate (PET) bottles and pre-forms for beverages and other liquids packing industries. Coca Cola, PepsiCo, Murree Brewery, Qarshi Industries and Punjab Oil mills are few of the renowned customers of ECOP. Pattern of Shareholding As of June 30, 2025, ECOP has a total of 48.258 million shares outstanding which are held by 2359 shareholders. Local general public is the largest shareholder of ECOP with 57.15 percent shares followed by Directors, CEO, their spouse and minor children holding 26.026 percent shares of the company. The remaining shares are held by other categories of shareholders. Historical Performance (2019-24) Barring 2020, ECOP’s topline has posted year-on-year growth since 2019. Conversely, its bottomline grew in 2021, 2022, 2024 and 2025. In 2020, ECOP posted net loss. The margins of the company, which had been shrinking until 2020 posted a rebound in 2021. In the subsequent year, while operating and net margins continued to look up, gross margin plunged. In 2023, gross and operating margins gained momentum while net margin slid. ECOP’s margins registered staggering growth in the following years to attain their optimum level in 2025.The detailed performance review of the period under consideration is given below. In 2019, ECOP’s topline posted 23 percent year-on-year rise to clock in at Rs.4074.87 million. Despite sluggish economic activity on account of high inflation, hike in discount rate, elevated electricity tariffs and Pak Rupee depreciation, the company was able to keep its sales volume almost intact at the previous year’s level. ECOP increased the capacity utilization of its blowing segment from 57 percent in 2018 to 58 percent in 2019. It also completed its new investment of large-sized bottles and containers to enhance its customer base. This drove up the annual capacity of its injection segment from 510.983 million bottles in 2018 to 796.733 million bottles in 2019. The company utilized 59 percent of its injection segment’s annual capacity in 2019 to meet the demand. ECOP couldn’t pass on the impact of a spike in the cost of production to its customers (beverage manufacturers) as they themselves were bearing the brunt of inflationary headwinds. The demand of beverages is inversely proportional to increase in its sales price which made beverage manufacturers incapable of increasing the prices proportionately. This pushed ECOP’s GP margin down to 9.47 percent in 2019 GP margin of 10.96 percent posted in 2018 despite 6.23 percent year-on-year rise recorded in gross profit for the year. Selling & administrative expense grew by 15.25 percent and 20.23 percent respectively mainly on account of higher payroll expense as the number of employees grew from 266 in 2018 to 280 in 2019 and also because of 35 percent hike in petroleum prices which inflated the truck freight rates by 12 percent. Operating profit registered 18.47 percent year-on-year improvement; however, OP margin tumbled to 5.80 percent in 2019 from OP margin of 6 percent registered in 2018. Finance cost grew by 90.19 percent year-on-year due to hike in discount rate coupled with financing obtained for the plant expansion during the year. Net profit plunged by 39.40 percent year-on-year in 2019 to clock in at Rs.74.81 million with NP margin of 1.84 percent which was significantly lower than the NP margin of 3.73 percent posted by the company in 2018. EPS also marched down from Rs.3.56 in 2018 to Rs.1.96 in 2019. In 2020, ECOP’s topline dwindled by 25 year-on-year to clock in at Rs. 3053.947 million. This was because COVID-19 hit at the time of seasonal peak in the demand of beverages. Due to depressed demand, the capacity utilization was downward adjusted at 41 percent and 52 percent for the blowing and injection segments respectively (see the graph of yearly production versus capacity utilization). The company increased the annual capacity of its blowing plant from 304.2 million bottles in 2019 to 327.14 million bottles in 2020. The enhanced capacity was meant to cater large bottles for edible oil and drinking water. However, that couldn’t bring in additional sales as the key customers for this segment couldn’t run their production lines on account of quarantine protocols. Cost of sales dipped by a lesser magnitude of 21.23 percent year-on-year in 2020, translating into 61.65 percent thinner gross profit with GP margin sliding down to 4.85 percent. Another key factor that contributed towards weaker gross margin was the decline in PET resin price due to Russia-OPEC crude oil war. This not only alleviated ECOP’s topline but also resulted in an unforeseen inventory loss for the company. Selling expense ticked up by 1.76 percent year-on-year in 2020 despite petite volumes due to 14 percent spike in freight charges during the year. Administrative expense, however, shrank by 4.83 percent year-on-year as the number of employees was significantly reduced from 280 in 2019 to 247 in 2020. Operating profit posted 94.77 percent decline in 2020 with the lowest ever OP margin of 0.4 percent. Finance cost grew by 23.70 percent year-on-year in 2020 due to high discount rate for the most part of the year. ECOP posted net loss of Rs.103.70 million in 2020 with loss per share of Rs.2.72. With the second wave of COVID-19 hitting during 1QFY21 and the Delta variant in the 4QFY21, ECOP’s sales couldn’t really pick up as its peak season again came under the pressure with the closure of educational institutions, markets and wedding halls coupled with an intermittent ban on inter-city travel. The topline could only post a marginal 1.53 percent uptick in 2021 to clock in at Rs.3100.689 million. This came on account of large containers and bottles sales which were added to ECOP’s portfolio last year. Pre-form sales also grew by 9 percent year-on-year in 2021, however, the sales volume of bottles dropped by 5 percent year-on-year, largely swallowing the impact of an increase in the off-take of the other two categories. Cost of sales dipped by 3.68 percent year-on-year in 2021 which resulted in 103.82 percent boost in the gross profit. GP margin also jumped up to 9.73 percent in 2021. Selling expense dipped by 4.76 percent year-on-year in 2021 due to lesser crude oil prices resulting in rationalized freight, travelling and conveyance charges. Administrative expense grew by 4.45 percent year-on-year in 2021 due to higher payroll expense. Operating profit multiplied by 1190.64 percent in 2021 with OP margin rebounding to 5.13 percent. Finance cost shrank by 41 percent year-on-year in 2021 due to significant reduction in discount rate. As a consequence, ECOP was able to post net profit of Rs.46.11 million in 2021 with NP margin of 1.50 percent and an EPS of Rs.1.10. In 2022, Pakistan’s economy saw recovery from global pandemic which spurred economic growth; however, the economic activity was crippled towards the end of the year on account of current account and fiscal slippages and immense political turmoil that began to circle the economy. During 2022, ECOP’s topline posted staggering 62 percent year-on-year growth to clock in at Rs. 5025.212 million. This was on account of 84 percent year-on-year rise in bottle sales and 42 percent year-on-year rise in pre-form sales in 2022. Furthermore, the spike in PET Resin prices also resulted in an upward revision in the prices of the company’s products. Cost of sales grew by an immense 64.89 percent year-on-year due to historic high crude oil prices, hike in electricity tariff, overall inflation and Pak Rupee depreciation. Gross profit grew by 35.85 percent year-on-year in 2022, however, GP margin deteriorated to 8.15 percent in 2022. Selling expense grew by 4.43 percent year-on-year in 2022 due to higher sales volume as well as increased freight charges on account of higher petroleum prices. Administrative expense also escalated by 12.40 percent year-on-year in 2022 as the number of contractual employees grew from 368 in 2021 to 591 in 2022, however, permanent employees dropped to 224 in 2022 from 246 in 2021. Operating profit registered 68.45 percent year-on-year rise in 2022 with OP slightly improving to 5.34 percent. Finance cost grew by 32 percent year-on-year in 2022 due to multiple rounds of monetary tightening during the year. Net profit managed to post 117.24 percent year-on-year growth in 2022 to clock in at Rs.100.18 million with NP margin of 2 percent and EPS of Rs.2.39. During 2023, ECOP’s net sales posted 13.22 percent year-on-year rise to clock in at Rs.5689.493 million. This was on account of 32 percent higher prices of PET Resin (essential raw material) and 3 percent higher sales volume of bottles. Conversely, the sale of pre-forms couldn’t pick up due to floods and dislocation of large population in the 1QFY23. Cost of sales grew by 10.66 percent year-on-year due to spike in the prices of basic raw materials, Pak Rupee depreciation and elevated electricity tariff during the year. Gross profit grew by 42 percent year-on-year in 2023 with GP margin rising up to 10.23 percent as the company partially passed on the cost hike to its customers. Selling & distribution expense grew by a massive 393.98 percent in 2023 due to exorbitant freight charges on account of improved sales volume and higher fuel prices. Administrative expense also posted 18.52 percent surge in 2023 mainly on account of higher payroll expense as well as elevated vehicle running & maintenance charges. ECOP streamlined its workforce from 815 employees in 2022 to 668 employees in 2023. Operating profit strengthened by 13.71 percent in 2023 with OP margin slightly inching up to 5.36 percent. Higher discount rate as well as increased working capital requirements pushed the finance cost up by 82.92 percent in 2023. ECOP closed the year with 59.93 percent reduction in its net profit which clocked in at Rs.40.143 million with EPS of Rs.0.83 and NP margin of 0.71 percent. ECOP net sales improved by 9.19 percent to clock in at Rs.6,212.186 million. Sales volume of bottles was enhanced by 17 percent in 2024. This resulted in an all-time high capacity utilization of 67 percent recorded by its blowing production plant and 65 percent capacity utilization recorded by its injection production plant during the year. Enormous surge in electricity prices, high crude oil prices as well as spike in the prices of raw and packaging materials drove the cost of sales up 6.40 percent in 2024. With improved sales volume of bottles and upward price revision, ECOP was able to record 33.76 percent higher gross profit in 2024 with GP margin attaining its optimum level of 12.48 percent. Selling expense magnified by 12.34 percent in 2024 due to higher sales volume of bottles as well as the implementation of axle load regime which inflated the transportation cost. Administrative expense ticked up by 5.95 percent in 2024 on account of inflationary pressure and bigger workforce which drove up the payroll expense. ECOP expanded its workforce from 668 employees in 2023 to 750 employees in 2024. Other expense surged by a massive 121.17 percent in 2024 due to higher provisioning done for WWF and WPPF as well as loss recorded on scrap sales. Other income also strengthened by 109.90 percent in 2024 due to liabilities written back during the year coupled with exchange gain. ECOP recorded 52.63 percent year-on-year enhancement in its operating profit in 2024. OP margin also attained its highest level of 7.49 percent in 2024. Finance cost inched up by only 8.34 percent in 2024 primarily due to higher discount rate while the outstanding borrowings took a dip during the year. The company was able to reverse the net loss it incurred during the 9MFY24 and recorded net profit of Rs.128.943 million in 2024, up 221.21 percent year-on-year. This translated into EPS of Rs.2.67 and NP margin of 2.1 percent in 2024. In 2025, ECOP recorded 15.63 percent improvement in its net sales which clocked in at Rs.7183.111 million. During the year, there was significant decline in inflation and discount rate. Pak Rupee also gained momentum against the greenback providing immense respite in the cost of imported raw materials. Crude oil prices also dipped resulting in a dip in the prices of PET Resin which is the essential raw material of ECOP. This enabled the company to share the relief with its customers by downward revising the prices of its products. Curtailed prices and increasing purchasing power of consumers instilled higher sales volume of PET bottles and culminated into 55.22 percent stronger gross profit in 2025. GP margin also picked up to 16.75 percent in 2025. During the year, the local beverages brands added new production capacities to meet the rising demand of Cola and drinks. This created immense demand for PET bottles. ECOP also diversified in PET containers for cooking oil, hygiene products and medicines to avoid the seasonal impact of carbonated drink sales. Robust sales volume drove up distribution expense by 29.96 percent in 2025. Administrative expense also escalated by 37 percent in 2025 due to higher payroll expense on account of a larger workforce comprising of 925 employees as the company is continually enhancing its capacity and achieving greater production volumes to meet the market demand. Market induced rise in salaries and wages was also one of the reasons of higher administrative expense recorded in 2025. Greater profit related provisioning was main driver of 105.42 percent surge in other expense in 2025. Other income deteriorated by 58.89 percent in 2025 due to high-base effect as the company had written off liabilities worth Rs.10.065 million in the previous year. ECOP recorded 63.76 percent higher operating profit in 2025 with OP margin clocking in at 10.61 percent. Finance cost tapered off by 21.78 percent during 2025 due to lower discount rate and lesser outstanding borrowings at the end of the year. ECOP was able to record net profit of Rs.339.84 million in 2025 with EPS of Rs.7.04 and NP margin of 4.73 percent. Recent Performance (1HFY26) During the first half of the ongoing fiscal year, ECOP’s net sales plunged by 6.20 percent to clock in at Rs.2878.83 million. This was due to 10 percent decline in PET Resin prices which is the core raw material for Preforms and Bottles. In accordance, the company also had to downward revise the prices of its products. Sales volume of PET bottles also shrank during the period under consideration due to floods in the first quarter of the year. Declining cost of energy and transportation and lower fixed cost per unit due to the company’s diversification into large bottles and container segments enabled it to attain GP margin of 14.30 percent in 1HFY26 versus GP margin of 14.40 percent recorded in 1HFY25. In absolute terms, gross profit tapered off by 7 percent in 1HFY26. Selling and administrative expense surged by 13 percent and 16.54 percent respectively during the period under consideration which was in line with stable sales and production volumes due to diversification of sales mix. 59.84 percent decline in other expense in 1HFY26 appears to be due to high-base effect as the company booked impairment on idle equipment and machinery during 2025 which was later sold off. Other income also diminished by 96.51 percent in 1HFY26 likely due to lower income from financial assets on account of monetary easing and weaker cash position of the company in 1HFY26. ECOP recorded 16.11 percent decline in its operating profit in 1HFY26 with OP margin clocking in at 7.32 percent versus OP margin of 8.18 percent recorded in 1HFY25. Finance cost dropped by 44.23 percent in 1HFY26 due to monetary easing. Net profit ticked up by 4.96 percent to clock in at Rs.88.37 million in 1HFY26. This translated into EPS of Rs.1.83 in 1HFY26 versus EPS of Rs.1.74 recorded in 1HFY25. NP margin improved from 2.74 percent in 1HFY25 to 3.10 percent in 1HFY26. Future Outlook Lately, the decline in inflation and interest rate coupled with receding crude oil prices resulted in improved purchasing power of consumers. This translated into higher demand of bottled water and soft drinks particularly in a country like Pakistan where summers are long and urban young population is rising at an exponential pace. The company already enhanced its capacity in 2025 to meet the higher demand. 3rd and 4th quarters of FY26 are expected to boast robust financial performance for ECOP due to Ramadan, Eid and summer effect. On the flipside, ongoing geopolitical tension in the Middle Eastern region has pushed up the petroleum prices. This in-turn will result in the price escalation of PET Resin - the core raw material of ECOP. In order to offset its negative effect, the company has to attain operational efficiency in its production lines and cut down its cost to take optimum benefit of the ever-growing demand of bottled water and carbonated drinks. The company is in the process of importing Preform manufacturing system which will further boost its production capacity and operational efficiency.

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