Business Recorder
Packages Limited (PSX: PKGS) is a public listed company incorporated in Pakistan. The company was established as a joint venture between the Ali Group of Pakistan and Akerlund & Rausing of Sweden in 1957. Initially, PKGS was engaged in converting paper and paperboard into packaging for consumer industry. Over the years, the company has enhanced its facilities to provide variety of packaging solution to a number of consumer brands across industries. It is also a leading manufacturer of tissue paper products. As of now PKGS is operating as a holding company and hence its performance is largely determined by the performance of its group companies – within and outside Pakistan. Pattern of Shareholding As of December 31, 2025, PKGS has a total of 89.380 million shares outstanding which are held by 3782 shareholders. Associated companies, undertakings and related parties have the majority stake of 50.39 percent in the company. This category is mainly dominated by IGI Investments (Pvt.) Limited with 29.88 percent shares. Local general public accounts for 28.66 percent of PKGS’s shares. Modarabas and Mutual funds account for 6.67 percent of the company’s shares while directors, CEO, their spouse and minor children have 5.78 percent shares. Around 2.13 percent of the company’s shares are held by foreign companies and 1.86 percent by insurance companies. The remaining shares are held by other categories of shareholders. Historical Performance (2019-24) PKGS’s topline rode an upward trajectory over the period under consideration. On the contrary, its bottomline slid thrice during the period i.e. in 2019, 2022 and 2024. The company registered net loss in 2024. PKGS’s gross and operating margins inclined until 2023 followed by a drastic fall in 2024. In 2025, gross margin ticked up while operating margin continued to plunge. Conversely, its net margin followed the same trajectory as its bottomline. The detailed performance review of the period under consideration is given below. In 2019, PKGS’s topline grew by 15 percent year-on-year to clock in at Rs.60,905.85 million. This was on account of significant improvement in the core manufacturing operations of PKGS. Gross profit enlarged by 51.16 percent year-on-year in 2019 with GP margin rising up from 12.73 percent in 2018 to 16.73 percent in 2019. This was mainly on account of effective cost control mechanism put in place by the company. Investment income dropped by 30.11 percent year-on-year in 2019 due to decline in dividend income from Nestle Pakistan Limited and Tetra Pak Pakistan Limited. Other income grew by 325.22 percent in 2019 as a result of liabilities no longer payable written back. Administrative expense and distribution expenses surged by 10.76 percent and 6.75 percent respectively in 2019. This was the consequence of higher payroll expense, freight & distribution as well as advertising and promotion expense incurred in 2019. Impairment of investment pushed up other expense by 92.81 percent in 2019. PKGS recorded 48 percent bigger operating profit in 2019 with OP margin growing from 7.55 percent in 2018 to 9.71 percent in 2019. Due to higher discount rate and increased long-term borrowings, finance cost grew by 75.28 percent in 2019. This coupled with the higher effective tax rate of 85.65 percent in 2019 versus 30.82 percent in 2018 pushed the net profit down by 76 percent in 2019 to clock in at Rs.278.06 million. This translated into EPS of Rs.1.71 in 2019 versus EPS of Rs.10.34 posted in 2018. NP margin also plummeted from 2.19 percent in 2018 to 0.46 percent in 2019. In 2020, performance of manufacturing operations remained vigorous resulting in 6.69 percent topline bigger topline to the tune of Rs.64.981.48 million recorded by PKGS. Improved pricing and better volumes along with cost control resulted in GP margin of 20.38 percent in 2020 with Gross profit mounting up by 30 percent. Operating expense remained in check during the year mainly on account of significantly lesser travelling charges and advertisement & promotion expense incurred during the year. PKGS operating performance was further strengthened by a massive growth in share of profit from associates and joint ventures which clocked in at Rs.340.21 million in 2020 versus Rs.5.39 million in the previous year. On the downside, investment income slid by 63.29 percent in 2020 primarily due to lower dividend income from Nestle Pakistan Limited. Lesser liabilities written back during the year drove other income down by 38.95 percent in 2020. Other expense slipped by 34.46 percent in 2020 due to lower impairment booked on investment. PKGS registered 44.42 percent bigger operating profit in 2020 with OP margin rising up to 13.14 percent. Finance cost shrank by 13 percent in 2020 due to low discount rate as well as lower running finances obtained during the year. All these factors culminated into a bottomline growth of 1531 percent in 2020. The company’s net profit clocked in at Rs.4,535.70 million in 2020 with NP margin of 6.98 percent and EPS of Rs.47.44. 2021 was another pleasant year for PKGS with net revenue registering stellar growth of 23.61 percent over the last year to clock in at Rs. 80,322.30 million. This was particularly on the back of sale of goods manufactured by the company on its own, High cost of sales and services kept GP margin in check which inched up to 20.8 percent in 2020 despite 26.18 percent increase in gross profit. Operating expense grew in line with inflation and also because of increased payroll expense as the number of employees grew from 3228 in 2020 to 3271 in 2021. The company also incurred higher advertisement and freight expense in 2021. PKGS’s operating profit posted 42.80 percent rise in 2021 mainly on the heels of a massive growth in other income (reversal of impairment on fixed assets and associate), superior investment income and hefty share of profit from associates recognized during the year. OP margin grew to 15.18 percent in 2021. Low discount rate coupled with better credit management resulted in 25 percent lower finance cost incurred during the year. This translated into year-on-year bottomline growth of 57.64 percent in 2021. PKGS’s net profit clocked in at Rs.7150.15 million in 2021 with EPS of Rs.71.41 and NP margin of 8.90 percent. In 2022, PKGS’s topline boasted a staggering 51.76 percent year-on-year growth to clock in at Rs.121,893.59 million. This was mainly on account of better core operations of the company. During the year, all the categories of PKGS’s core operations i.e. paper & paperboard produced, paper & paperboard converted, plastics converted and inks produced witnessed considerable improvement. High inflation, energy tariffs and escalated cost of raw materials didn’t let the company realize any growth in the GP margin which stayed at the last year level of 20.80 percent. This was despite 51.69 percent year-on-year rise recorded in PKGS gross profit in 2022. The company’s investment income also buttressed its financial performance in 2022 as dividend income from its long-term investments grew by 28.85 percent year-on-year. Other income also registered a tremendous 435 percent year-on-year rise in 2022 mainly on the back of bargain purchase gain on the acquisition of its subsidiary, Tri-pack Films Limited (TPFL). Higher scrap sales and WPPF provision written back also majorly contributed in the growth of PKGS’s other income in 2022. Share of profit from associates and joint ventures declined by 62.85 percent in 2022. The company also booked net impairment loss on financial assets which included amount due from Packages Lanka (Private) Limited and Flexible Packages Converters (Proprietary) Limited in respect of management fee receivable. Other expense also mounted by 168 percent in 2022 on the back of exchange loss incurred during the year as well as impairment booked on the assets of Flexible Packages Converters (Proprietary) Limited. All these factors culminated into 57.17 percent higher operating profit recorded by PKGS in 2022 with OP margin slightly moving up to clock in at 15.73 percent. Finance cost mounted by 180.37 percent year-on-year in 2022 on account of high discount rate and also because of a whopping increase in running finances and long-term finances obtained during the year. Increased borrowings during the year are also reflected in the company’s gearing ratio jumping up from 40 percent in 2021 to 51 percent in 2022. This coupled with the higher effective tax rate of 41.4 percent in 2022 versus 25.57 in the previous year translated into 2.38 percent year-on-year erosion in PKGS net profit in 2022. Net profit stood at Rs.6,979.83 million in 2022 with EPS of Rs.72.12 and NP margin of 5.73 percent. 2023, despite all the challenges it carried along, proved to be welcoming for PKGS as its topline rose by 28.78 percent year-on-year to clock in at Rs.156,972.08 million. This was particularly on the back of local sales of goods and services by the company. Improved core operations of the company coupled with the upward price revisions drove up its gross profit by 45.58 percent in 2023 with GP margin climbing up to 23.51 percent. Administrative & distribution expenses surged by 26.41 percent and 50.86 percent respectively in 2023 on account of inflationary pressure and increased operational activity. During the year, the company hired additional human resources which took the tally up from 3,264 in 2022 to 4,051 in 2023. This considerably drove up the payroll expense. Moreover, higher advertisement & promotion expense as well as freight & distribution charges also had a great say in driving up the operating expense in 2023. Other expense dipped by 10 percent in 2023 as no impairment was booked on the assets of Flexible Packages Converters (Proprietary) Limited. Other income improved by 32.72 percent in 2023 predominantly due to bargain purchase gain recognized on the acquisition of subsidiary, Hoechst Pakistan Limited (HPL), formerly known as Sanofi-Aventis Pakistan Limited. Net impairment loss on its financial assets magnified by 29.93 percent in 2023. Its investment income (dividend income) slid by 17.15 percent in 2023. This was because during the year, Flexible Packages Converters (Proprietary) limited was sold to a third party as it was unable to meet its liabilities towards the creditors. Hence, the group derecognized the net assets of FPC and didn’t expect any future inflow from this investment. During the year share of profit from associates & joint ventures grew by 14.91 percent. PKGS recorded 50.93 percent higher operating profit in 2023 with OP margin of 18.43 percent. Finance cost escalated by 86.46 percent in 2023 on account of monetary tightening and increased borrowings majorly to acquire shares of HPL. Gearing ratio dipped to 49 percent in 2023 due to higher equity on the back of increased un-appropriated profits and FVOCI reserves. Net profit grew by 48.90 percent in 2023 to clock in at Rs.10,392.98 million with EPS of Rs.100.18 and NP margin of 6.62 percent. PKGS recorded 12.61 percent greater topline to the tune of Rs.176,761.28 million in 2024. Sales of goods and services posted improvement during the year. Cost of sales surged by 18.84 percent in 2024 mainly on the back of higher energy tariff, inflationary pressure, hefty cost of raw materials and elevated depreciation expense on the back of capital expenditure undertaken in the past years. Inferior sales mix and the inability to pass on the impact of cost hike to the consumers pushed gross profit down by 7.68 percent in 2024 with GP margin falling down to 19.27 percent. Other income didn’t prove to be favorable either as it eroded by 62.38 percent in 2024 due to high-base effect as the company recorded bargain purchase gain on the acquisition of HPL in the previous year. Investment income (dividend income) also slumped by 38 percent in 2024. Share of profit of associate and joint ventures mounted by 44.40 percent in 2024. Operating profit tapered off by 31.56 percent in 2024 with OP margin sliding down to 11.20 percent. Finance cost multiplied by 35.63 percent in 2024 due to higher discount rate and increased outstanding borrowings. The company obtained loan for capital expenditure and to make strategic investment in investments in StarchPack (Private) Limited and Packages Trading FZCO. Gearing ratio jumped up to 56 percent in 2024. PKGS recorded net loss of Rs.1378.97 million in 2024 with loss per share of Rs.32.55. In 2025, PKGS’s net sales ticked up by 9.32 percent to clock in at Rs.193,227.71 million. This was the result of favorable sales mix achieved during the year. Local sales of the company’s own manufactured goods was the main revenue driver for the company in 2025. Increased sales volume and superior sales mix allowed PKGS to record 15.83 percent higher gross profit in 2025 with GP margin bouncing to 20.42 percent. Higher payroll expense, professional services charges, computer charges, training expense as well as depreciation expense pushed up administrative expense by 11.14 percent in 2025. The company streamlined its workforce from 4834 employees in 2024 to 4665 employees in 2025. Distribution expense spiked by 22.97 percent in 2025 due to elevated salaries of sales force, higher freight charges and greater advertisement & promotion budget allocated for the year. Other expense escalated by 118.70 percent in 2025 due to greater profit related provisioning as well as exchange loss, de-recognition of intangible assets (trademarks which were previously utilized under licensing agreement but then purchased), donations as well as unclaimed input tax written off during the year. Other income deteriorated by 29.27 percent due to significant decline in insurance claim for the recovery of loss due to business interruption. Investment income strengthened by 95.43 percent in 2025 due to increased profitability from PKGS’s long-term investments including NESTLE, SYS, Coca Cola and Pakistan Beverages Development Corporation Limited. Together, other income and investment income wiped off PKGS’s other expense in 2025. Share of profit from associates also improved by 21.38 percent in 2025. PKGS recorded 5.57 percent uptick in its operating profit in 2025, however, OP margin slightly ticked down to 10.82 percent. Despite increased borrowings, finance cost plummeted by 20.47 percent in 2025 due to monetary easing. Gearing ratio inched up to 59 percent in 2025. The company recorded net profit of Rs.260.587 million in 2025 with NP margin of 0.13 percent. However, after taking into account the non-controlling interest of Rs.2096.893 million, the loss attributable to the owners of the company stood at Rs.1836.306 million. This resulted in loss per share of Rs.20.55 in 2025. Recent Performance (1QCY26) During the first quarter of CY26, PKGS’s net sales ticked up by 6.74 percent to clock in at Rs.53,098.36 million. This was on the back of superior sales volume and greater focus on high-margin products. This coupled with cost control measures implemented during the period resulted in 23.18 percent superior gross profit in 1QCY26 with GP margin clocking in at 23.67 percent versus GP margin of 20.51 percent recorded in 1QCY25. Increased production operation and greater sales volume resulted in 21.32 percent spike in administrative expense and 22.52 percent spike in distribution expense in 1QCY26. Other expense dipped by 35.32 percent in 1QCY26 likely due to high-base effect as the company de-recognized its intangible assets in the previous year. Other income grew by 15.74 percent in 1QCY26 likely due to greater scrap sales and amortization of deferred government grant. Share of profit from associates tapered off by 10.40 percent in 1QCY26. Together, other income, share of profit from associates and investment income were able to offset PKGS’s other expense in 1QCY26. This resulted in 28.49 percent stronger operating profit in 1QCY26 with OP margin clocking in at 12.74 percent versus OP margin of 10.58 percent recorded in the comparative period. Finance cost dipped by 3.83 percent due to lower discount rate. PKGS recorded 573.43 percent higher net profit to the tune of Rs.1265.205 million in 1QCY26 with NP margin of 2.38 percent. This was against the NP margin of 0.38 percent recorded in 1QCY25. After accounting for non-controlling interest, PKGS posted EPS of Rs. 7.73 in 1QCY26 versus loss per share of Rs.3.39 posted in 1QCY25. Future Outlook Amidst highly challenging and competitive environment, the company is thriving on the heels of its core function of providing packaging solutions across the industries. PKGS is also taking tremendous benefit from the superior performance of its subsidiaries, investments and joint ventures. The associated companies of PKGS are serving across various sectors of the economy, providing their holding company the benefit of income diversification. Moreover, its foreign based subsidiaries will continue to be the source of exchange gain for the company. The company has recently made injection of Rs.3 billion into StarchPack (Private) Limited and Rs.8 billion in Bullehshah Packaging Private (Limited) to improve the capital structure of both the companies. This will greatly improve the ROI from these companies.
Go to News Site