During the year under review the company posted highest ever sales but gross profit declined from Rs 1.352 billion in FY05 to Rs 1.294 billion in FY06, the year under review.
Sales increased because of mainly growing consumer demand but gross profit declined due to rising input prices of basic raw materials, increase in natural gas and furnace oil prices used for power generation to a large extent, these price increases could not be passed on to consumers in view of the risk of losing market share. Profit from operations was 16% lower in FY06 but finance cost also declined. The company booked larger investment income at Rs 5.669 billion (FY05: Rs 0.613 billion) which comprised "gain on the sale of long term investments" and dividend income from related parties.
The company's net profit after taxation amounted to Rs 6.100 billion in FY06 as compared to Rs 1.015 billion in FY05. The directors recommended cash dividend at 60% (2005: 60%) and bonus stock dividend at 5%.
Market value of its shares invariably remained quite high. During the last 52 weeks market price of its shares ranged between Rs 185.15 and Rs 244 per share on 26-4-07, the closing price of the share was quoted at Rs 223 per share which is more than 22 times of the par value.
Packages Limited is a public limited company incorporated in the province of Sindh and is listed on Karachi, Lahore and Islamabad Stock Exchanges. It is principally engaged in the manufacture and sale of paper, paperboard, packing materials, and tissue products.
Established in 1956 as a joint venture between the Ali Group of Pakistan and Akerlund and Rausing of Sweden, the company provides premium packaging solutions to businesses.
Its on-site paper and board mill, established in 1968 has constantly increased its production capacity. A new plant with even greater capabilities is taking physical shape in the name of Bulleh Shah Paper Mill (BSPM) project. Packages Ltd is relocating paper manufacturing facilities from the existing location which has limited capacity for expansion to a new site (BSPM) 54 km from the present one. This will radically increase paper and paperboard production from 100 thousand to 300 thousand tonnes per year.
The company's Annual Report 2006, reputed that the work on BSPM phase had entered into final stages the details of which are available in the Director's Report.
In 2003, Packages entered into an agreement with Vimpex of Austria to provide management and technical assistance to a paperboard mill in Syria.
In 1999-2000, Packages had successfully completed the expansion of its flexible packaging line.
In 1996, Packages signed joint venture agreement with Printcare (Ceylon) Ltd for the production of flexible packaging materials in Sri Lanka. Packages has 79% ownership of its equity.
In 1994, Coates, Lorrillieux Pakistan Ltd commenced production and in this Packages has 55% ownership.
In 1993, another viable joint venture company Tri-pack Pakistan Ltd at Hattar started production in which Packages has 33% equity. The joint venture partners of Tri-pack are packages, Mitsubishi Corporation of Japan, AlTawfeeq Company for Investment Funds, Saudi Arabia, and the public.
In 1982 Packages Ltd inked a joint venture agreement with Tetra Pak International in Tetra Pak Pakistan to manufacture paperboard for liquid food packaging and to market Tetra Pak packaging equipment.
As regards its production overview, it can be seen from the "capacity and actual production" data appended with this brief that the company produced 3% less paper and board due to the product mix.
In conversion side, 1.5% more paper and board was converted.
During the FY06, ended on 31st December, the company's gross sales crossed Rs 9 billion mark in sales which was record highest of its career.
The "performance statistics" appended with this brief shows net sales after deductions of sales tax and commission from gross sales. Net sales in FY06 amounted to Rs 7.874 billion as compared to Rs 7.099 billion in the preceding year FY05. Export sales amounted to Rs 158.8 million.
All business lines contributed positively to the growth in sales. The highest growth in packaging materials was seen in food and beverages industry in all types of packing.
The tissue products business crossed the Re one billion mark in sales. In the retail market, tissue product range of facial and toilet tissues selling under the brand names of Rose Petal, Tulip and Double Horse increased by 14%.
There has been considerable growth in export of tissue products to Afghanistan during the year.
According to the Pie Chart of the breakup of sales in 2006, in the Annual Report 2006 of the company, the largest contribution of 31% of sales was by Flexible packaging business. This was followed by Paper and Board 21%, Carton 18%, Corrugation also 18% and Consumer Products Packaging at 12%.
The company directors foresee the forthcoming year 2007 with optimism in view of the availability of additional capacities for paper and paper board from BSPM (Bulleh Shah Paper Mill).
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Performance Statistics (Million Rupees)
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31st December 2006 2005
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Share Capital Paid-up: 698.79 698.75
Reserves & Surplus: 12,974.01 7,037.50
Shareholder's Equity: 13,672.80 7,736.25
L.T. Debts: 6,000.00 1,000.00
Deferred Liabilities: 688.46 547.47
Current Liabilities: 2,312.22 2,335.83
Fixed Assets Tangible: 13,216.21 6,270.92
Investment Property: 14.42 15.38
Intangible Assets: 2.53 5.30
L.T. Investments: 5,775.67 693.57
L.T. Loans & Deposits: 180.62 16.20
Retirement Benefits: 69.81 60.29
Current Assets: 3,414.22 4,558.74
Total Assets: 22,673.48 11,620.40
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Sales, Profit & Pay Out:
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Net Sales: 7,846.60 7,098.76
Gross Profit: 1,294.60 1,352.98
Other Operating Income: 252.01 184.68
Profit From Operations: 757.61 902.41
Finance (Costs): (78.91) (185.53)
(Depreciation): (372.92) (399.46)
Investment Income: 5,669.14 613.05
Profit Before Taxation: 6,347.84 1,329.93
Profit After Taxation: 6,100.78 1,015.36
Earnings Per Share (Rs): 87.30 16.24
Dividend Cash (%): 60.00 60.00
Dividend Stock (%): 5.00 -
Share Price (Rs) on 26/04/07: 223.00 -
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Financial Ratios:
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Price/Earning Ratio: 2.55 -
Book Value Per Share: 195.66 110.72
Price/Book Value Ratio: 1.14 -
Debt/Equity Ratio: 30:70 11:89
Current Ratio: 1.48 1.95
Total Assets Turn Over Ratio: 0.35 0.61
Days Receivables: 38 40
Days Inventory: 92 73
Gross Profit Margin (%): 16.50 19.06
Net Profit Margin (%): 77.75 4.30
R.O.A (%): 26.90 8.73
R.O.C.E (%): 29.96 10.93
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Capacity & Actual Production (000' Tonnes)
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Paper & Paperboard:
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Capacity: 111.30 111.30
Actual Production: 100.99 104.54
Capacity Utilization (%): 90.66 93.89
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Paper & Paperboard Converted:
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Capacity: 97.00 94.00
Actual Production: 86.45 85.22
Capacity Utilization (%): 89.12 90.66
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Plastics All Sorts Converted:
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Capacity: 11.00 8.00
Actual Production: 8.42 7.36
Capacity Utilization (%): 76.55 92.00
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COMPANY INFORMATION: : Chairman: Asadullah Khawaja; MD & Chief Executive: Syed Hyder Ali; Director: Mujeeb Rashid; Company Secretary: Adi J. Cawasji; Registered Office & Regional Sales Office; 4th Floor, The Forum, Block-9 Khayaban-e-Jami Clifton Karachi; Website: www.packages.com.pk; Head Office & Works: Shahrah-e-Roomi P.O. Amer Sidhu Lahore-5760; Karachi Factory: Sector 28 Korangi Industrial Area Karachi-74900.
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