PKGS earnings jump sharply in first half current year 2009

Half-year CY09 net profits of Packages Ltd (PKGS) jumped to Rs 4.16 billion against the loss of Rs 245 million during the same period last year. This depicts a one time increase as the impact of offloading $115 million worth of shares in Tetra Pak earlier jacked up the firms bottom line.
The company reported Rs 49.38 earning per share. Sales revenue during the period surged by 12 percent, mainly due to an approximately 2 percent increase in export sales revenue. Higher overseas sales (16% yoy) helped the firm mitigate the impact of worsening domestic operations, which saw sales plunging 26 percent. Cost of manufacturing has shown an increase of 20 percent. As a result, the firms gross margins dropped drastically to 2 percent from 8 percent last year.
The firms finance cost declined by 4 percent during the period and the recent move to restructure its books will likely lower its cost further. Recently, Packages allotted 21.7 million convertible nonvoting preference shares for Rs 190 each to IFC which will help it completely hedge its assets exposure to foreign debt liability to zero.
High equity base amid capital expenditure plans to expand capacity over time might lower its return to share holders in short term; but its in the interest of share holders that the company expand in the longer term by meeting soaring consumer demand.

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PKGS P&L

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RS (MN)               2QCY 09  2QCY 08   ()%  1HCY 09  1HCY 08   ()%

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Sales                   3,462    3,063      13%    6,671    5,954      12%

COGS                    3,372    2,700      25%    6,553    5,472      20%

Gross profit               90      362     -75%      118      482     -76%

Gross Margin               3%      12%     -78%       2%       8%     -78%

Operating profit           87       20     339%      197       49     299%

Finance cost              334      479     -30%      669      700      -4%

Investment Income           -        -       0%    9,028      325    2680%

L/PBT                 (2,140)    (338)        -    6,315    (263)        -

Taxation                 (49)       71        -  (2,149)       18        -

L/PAT                 (2,189)    (267)        -    4,166    (245)        -

L/EPS(Rs)             (25.94)   (3.16)        -    49.38   (2.90)        -

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