Lately, Pakistani FMCGs have been on a roll, as they have been grossing double-digit growth in their top-lines and earning handsome margins. Tri-Pack Films Limited - a major player in the supply chain network of consumer products ranging from tea, soap and cheese to cigarettes -seems to have benefited from the consumer goods boom too. The companys latest financials released yesterday reveal another successive quarter of exceptional growth in its top line. The packaging film manufacturer amassed roughly Rs5 billion in net sales during the six months ended June 2011 (1HCY11). This represents a formidable 42 percent growth compared to same period last year. For the first time, gross sales crossed Rs6 billion; however higher taxes and duties lowered the net sales figure. Costs of sales during 1HCY11 seem to be under check. Although it increased by 35 percent over the same period last year, this remains below the 45 percent growth in gross sales over the same period. Though cost of sales still accounts for over two-third of gross sales and four-fifth of net sales, it has come down during the period under review. Higher growth in net sales and less than proportionate rise in cost of sales have led to a marked improvement of 400 bps in the companys gross margins in 1HCY11. Distribution costs rose by 49 percent and administrative expenses increased by 43 percent during the period - not out of line with the top-line growth. However, both the expense heads are stable as a percentage of net sales. A superb, all round operating performance showed itself in the companys operating profits which surged by 88.6 percent, and swelled the operating margin to 15 percent in the period under review. Tri-Packs finance costs have declined for a fourth consecutive quarter, owing to retirement of a major chunk of term finance facility last year (obtained for the Port Qasim plant). A colossal tax payment of Rs232 million was also booked for the period under review. Splendid top-line growth, coupled with controlled expenditures on production, operations and administration, have more than doubled the net profits in 1HCY11. Net margins have also increased to 7.9 percent during the period - a gain of over 250 bps compared to same period last year. Tri-Pack is on course to improve its financial performance further. Encouraged by the expanding market for packaged goods, the company is investing Rs5.2 billion in a new BOPP plant, which is expected to be operational in 2HCY12. The outlook for the companys margins and earnings remains bright for the rest of the year, if the FMCGs continue their growth mode and raw material prices remain stable.
=================================================== Tri-Pack Films Limited =================================================== Rs (mn) 1HCY11 1HCY10 Chg =================================================== Net Sales 4,933 3,481 42% Cost of sales 4,017 2,968 35% Gross profit 915 512 79% Distribution cost 102 68 49% Administrative expenses 75 52 43% Operating profit 739 392 89% Other income 17 16 7% Finance cost 67 108 -38% PAT 389 187 108% ===================================================
Source: KSE announcement
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