MACPAC Films Limited (MACFL) was incorporated in Pakistan as a limited liability company in 1993. The company is engaged in the manufacturing, buying, and selling of plastic packaging. MACFL specializes in Biaxially oriented polypropylene (BOPP) and Cast Polypropylene (CPP) films as well as different value-addition films.

Pattern of Shareholding

As of June 30, 2024, MACFL has a total of 59.301 million shares outstanding which are held by 1196 shareholders. Directors, CEO, their spouses, and minor children have the majority stake of 63.23 percent in the company followed by the local general public holding 23.06 percent shares of the company. The government of Pakistan holds 7.87 percent shares of MACFL through EOBI. Around 2.98 percent of the company’s shares are held by Modarabas and Mutual funds. The remaining shares are held by other categories of shareholders.

Financial Performance (2019-24)

Barring 2020, MACFL’s topline has been on an upward journey since 2019. Conversely, its bottom line tells a different tale. In 2019, the company posted operating as well as net loss which were sustained in the subsequent year, however, with a lesser magnitude. The company recovered from losses in 2021. In 2022, MACFL’s bottom line took a nosedive, however, it stayed in the green zone. In 2023, MACFL registered the highest bottom-line growth and an unprecedented level of net profit. The bottom line shrank in 2024. MACFL’s margins follow the same path as its bottom line and max out in 2023 followed by a dip in 2024 [see the graph of profitability ratios]. The detailed performance review of the period under consideration is given below.

In 2019, MACFL’s topline registered 13.65 percent year-on-year growth. During the year, the company’s sales volume stood at 8302 MT which included CPP as well as BOPP. During the year, the company enhanced its product portfolio by starting the commercial production of its newly installed CPP plant with an annual capacity of 7000 MT. During the first year of its production, the CPP plant managed to produce 1121 MT of CPP. However, the sales growth couldn’t trickle down effectively as the cost of sales hiked by 21.53 percent year-on-year in 2019 due to soaring petrochemical landed cost which was the result of Pak Rupee depreciation. Furthermore, increased gas prices also fueled the fire. The company couldn’t increase the prices proportionately due to intense competition. As a consequence, gross profit shrank by 53.59 percent year-on-year in 2019 with the GP margin slipping to 4.3 percent from the GP margin of 10.5 percent recorded in 2018. Administrative expenses grew by 13.61 percent year-on-year in 2019 due to higher payroll expenses as the employee count increased after the installation of the CPP plant. Marketing expenses also surged by 19.23 percent on account of higher payroll expenses coupled with concentrated sales promotion. A massive exchange loss of Rs.112.496 million resulted in 206 percent year-on-year growth in the other expenses in 2019. Other income multiplied by 170.91 percent year-on-year in 2019 due to the revision of the provision for ECL as well as the gain in the disposal of operating fixed assets. Other income stood at 0.8 percent of MACFL’s net sales in 2019 versus 0.3 percent in 2018. The company posted an operating loss of Rs.111.96 million in 2019 versus an operating profit of Rs.88.62 posted in 2018. Finance cot grew by 293.67 percent year-on-year in 2019 as the company incurred capital expenditure for setting up a new plant. Moreover, the high discount rate also played a role in driving the finance cost up. MACFL ended up making a net loss of Rs.233.92 million in 2019 with a loss per share of Rs.3.94. This was against the EPS of Rs.0.99 posted by the company in 2018.

During 2020, MACFL’s topline registered a 10.37 percent year-on-year drop. This was despite a 16.62 percent rise in the sales volume which clocked in at 9682 MT in 2020. The revenue drop was the consequence of changes made in the sales mix during the year. A major milestone achieved during the year was the beginning of export sales which diversified the company’s geographical outreach. The capacity utilization of the BOPP plant dropped to 52 percent in 2020 from 54 percent in 2019. Conversely, the CPP plant attained a capacity utilization of 35 percent in 2020, up from capacity utilization of 16 percent recorded in the previous year. Cost of sales plummeted by 8.84 percent year-on-year in 2020 due to petrochemical landed cost and GIDC levy of Rs.31,084 million imposed during the year. Gross profit further shrank by 44.54 percent year-on-year in 2020 with GP margin sinking to 2.65 percent. Administrative inched down by 0.89 percent in 2020 primarily on account of lower directors’ remuneration and insurance charges incurred during the year. Marketing expenses dipped by 9 percent in 2020 due to curtailed sales promotion budget allocated for the year. Other expenses grew by 27.54 percent year-on-year in 202 which was mainly due to the imposition of GIDC. However, the rise in other expenses was offset by a splendid 915.71 percent growth in other income which was the consequence of gain on the sale of leasehold land in 2020. Other income constituted a whopping 9.4 percent of MACFL’s topline in 2020 versus its standing of 0.8 percent in the previous year. The company’s operating loss tamed by 96 percent in 2020 to clock in at Rs. 4.4 million. Finance costs registered a 77 percent year-on-year hike in finance cost as the discount rate was high for the most part of the year. MACFL registered a net loss of Rs.62.85 million in 2020 which was 73.13 percent less than the net loss recorded in 2019. Loss per share stood at Rs.1.06 in 2020.

In 2021, MACFL’s topline posted the highest-ever revenue growth of 39.74 percent year-on-year. This was on account of a 51 percent rise in the company’s off-take which reached 14,600 MT in 2021. The company also focused on improving its geographical footprint which was evident from the export revenue of Rs.52 million recorded in 2021. Not only that, the local market share of the company also grew by manifold in 2021. Out of its annual capacity of 15000 MT, MACFL utilized 71 percent to produce 10,655 MT of BOPP. CPP plant utilized 73 percent of its annual capacity and produced 5,107 MT. Higher sales and production volume effectively absorbed the fixed cost resulting in a 20 percent year-on-year hike in the cost of sales in 2021, much lower than the topline growth registered during the year. Gross profit multiplied by 762.8 percent year-on-year in 2021, translating into an impressive GP margin of 16.36 percent, up from a GP margin of 2.65 percent posted in 2020. Administrative expenses grew by 28.74 percent year-on-year which was the effect of increased capacity utilization which required more human resources, consequently, payroll expenses rose. Marketing expenses registered a steep hike of 133.68 percent year-on-year in 2021 primarily on the back of hefty carriage and octroi charges incurred during the year on account of greater sales volume. The absence of GIDC resulted in a 90.18 percent year-on-year fall in other expenses in 2021. Other income also slid by 69.48 percent year-on-year in 2021 due to the high-base effect as the company recorded a gain on the sale of fixed assets in the previous year. Despite elevated operating expenses, MACFL was able to post an operating profit of Rs.365.72 million in 2021 which culminated in an OP margin of 12.1 percent. Finance costs tamed by 41.59 percent year-on-year in 2021 on account of monetary easing and improved cash flow management which resulted in reduced borrowings. MACFL was able to post a net profit of Rs.186.67 million in 2021 as against a net loss of Rs.62.85 million in 2020. EPS stood at Rs.3.15 in 2021 while NP margin stood at 6.2 percent,

The growth trajectory continued in 2022 whereby MACFL posted a 37.97 percent year-on-year rise in its topline. This was the result of 15.42 percent volumetric growth achieved in 2022. Off-take stood at 16,851 MT in 2022, of which 11,531 MT pertained to BOPP and the remaining 5,500 MT were CPP. Export turnover stood at Rs.59 million in 2022 up from Rs.52 million in the previous year. In line with increased demand, the company operated its BOPP plant at 80.6 percent capacity and CPP plant at 86 percent capacity in 2022. Gross profit grew by 23.44 percent year-on-year in 2022; however, the declining value of Pak Rupee shoved the GP margin down to 14.63 percent in 2022 from 16.4 percent in 2021. Administrative and marketing expenses soared by 22.75 percent and 10 percent respectively in 2022. This was the result of an unprecedented level of inflation, higher production, and sales volume which pushed up the payroll expense and freight expense as well as strong sales promotion. Other expenses posted an unusually high growth of 730.20 percent in 2022 which was the effect of a massive exchange loss worth Rs.76.86 million incurred during the year due to the pitiable state of local currency. Other income posted a 27.42 percent year-on-year escalation primarily on account of scrap sales. Operating profit registered a marginal 2.51 percent year-on-year downtick in 2022 with OP margin sliding down to 8.54 percent. Despite the elevated level of discount rate, finance cost only grew by 2.4 percent in 2022 as the company considerably tapered its external borrowings in 2022. The bottom line shed its value by 1.29 percent year-on-year to clock in at Rs.184.25 million in 2022 with an NP margin of 4.41 percent and EPS of Rs.3.11.

Despite myriad challenges circling the local economy, MACFL, on account of its apt sales mix was able to turn the odds in its favor and registered a 31.89 percent year-on-year rebound in its net sales in 2023. MACFL’s sales volume dropped by 4.27 percent to clock in at 16,132 MT in 2023; however, it was able to maintain its market share. Upward price revisions also had a say in the company’s topline growth in 2023. This is evident by the cost of sales which grew by only 17.7 percent year-on-year in 2023. Gross profit posted a staggering 114.72 percent year-on-year jump in 2023 with GP margin climbing up to 23.82 percent from GP margin of 14.6 percent in the previous year. Administrative surged by 43.66 percent in 2023 due to higher payroll expense which was the effect of inflationary pressure and workforce expansion from 177 employees in 2022 to 186 employees in 2023. Marketing expense surged by 46.79 percent in 2023 which was the result of elevated carriage and octroi charges, salaries pertaining to the distribution network, and increased sales promotion drives conducted during the year. 110 percent rise in other expenses in 2023 was the consequence of higher provisioning for WWF and WPPF booked during the year as well as enormous exchange loss. Other income grew by 45.39 percent year-on-year in 2023 due to higher income from non-financial assets. During the year, the company booked an impairment loss worth Rs.35.12 million on its trade debts. Nonetheless, operating profit registered a 134 percent year-on-year rise with OP margin reaching its all-time high level of 15.16 percent in 2023. Finance cost bumped up by 42.42 percent year-on-year in 2023 and rightly so given the record level of discount rate. It is to be noted that the company paid off a significant portion of its outstanding liabilities during the year. This resulted in its gearing ratio falling down from 23.97 percent in 2022 to 1.97 percent in 2023. Higher effective taxation to the tune of 46 percent, up from 30 percent in the previous year somewhat diluted the bottomline growth in 2023. Net profit stood at Rs.379.21 million, up 105.82 percent year-on-year. NP margin clocked in at 6.9 percent in 2023 versus NP margin of 4.4 percent recorded in 2022. EPS also grew from Rs.3.11 in 2022 to Rs.6.39 in 2023.

In 2024, MACFL’s net sales ticked up by only 2.1 percent. This was on account of a 2 percent year-on-year slide in the company’s sales volume which stood at 15,804 metric tons in 2024. However, unprecedented inflationary pressure coupled with soaring energy and gas prices pushed the company’s gross profit down by 29.37 percent in 2024 with GP margin sliding down to 16.48 percent. Administrative surged by 51.11 percent in 2024 on account of inflationary pressure which drove up its payroll expense. The company also expanded its workforce from 186 employees in 2023 to 214 employees in 2024. Marketing expense also escalated by 54.05 percent in 2024 on the back of superior sales promotion drives to strengthen its geographical outreach coupled with higher freight and octroi charges incurred during the year. No exchange loss and lesser provisioning for WWF and WPPF resulted in 87.72 percent thinner other expenses incurred in 2024. Other income inched up by just 2.71 percent in 2024 on account of exchange gain and profit from Islamic banks. MACFL’s other income was huge enough to nullify the impact of other expenses. MACFL’s operating profit eroded by 33.63 percent in 2024 to clock in at Rs.553.76 million with OP margin slipping to 9.85 percent. Finance costs inched up by just 1 percent in 2024. Net profit tapered off by 32 percent in 2024 to clock in at Rs.257.72 million with EPS of Rs.4.35 and NP margin of 4.6 percent.

Future Outlook

With the gradual recovery in economic activity, local demand is expected to pick up in the near term. MACFL is also solidifying its position in the export markets which is evident from the successful development of a fully owned subsidiary overseas. This will not only strengthen MACFL’s sales revenue and margins by hedging against inflation and currency depreciation but the company will also be able to cut back on its freight cost as its export destinations will be nearer to its production site. The commencement of a solar power plant at its manufacturing facility will also result in substantial cost savings.