Cherat Packaging Limited (PSX: CPPL) was incorporated as a public limited company in 1989. The company is engaged in the manufacturing, marketing and sale of paper sacks, polypropylene bags and flexible packaging material.
Pattern of Shareholding
As of June 30, 2025, CPPL has an outstanding share capital of 49.095 million shares which are held by 1952 shareholders. Local general public has the majority stake of 39.58 percent in the company followed by associated companies, undertakings and related parties holding 37.69 percent shares.
Insurance companies account for 7.26 shares of CPPL while Directors, CEO, their spouse and minor children have a shareholding of 4.70 percent. Around 4.74 percent of the company’s shares are held by Banks, DFIs and NBFIs and 1.41 percent by foreign general public. The remaining shares are held by other categories of shareholders.
Financial Performance (2019-2025)
CPPL’s topline posted year-on-year growth until 2023 followed by a dip in 2024 and 2025. Its bottomline dipped in 2019 and 2020 followed by a rebound for the subsequent three years. In 2024, and 2025 CPPL’s bottomline plunged again. Its margins have been oscillating over the period under consideration. In 2019, gross and operating margins rebounded while net margin considerably plunged. This was followed by a drastic fall of margins in 2020.
In 2021, all the margins considerably recovered followed by a downtick in margins in the subsequent year. In 2023, gross and operating margins boasted their optimum high value while net margin continued to erode. In 2024, gross and operating margins eroded while net margin ticked up. This was followed by deterioration of all the margins in 2025.
The detailed performance review of the period under consideration is given below.
In 2019, CPPL posted a reasonable 14.13 percent year-on-year growth in its net revenue which clocked in at Rs.8093.41 million. This came on the back of improved volumes coupled with price increase.
During the year, the company commenced the operations of its flexible packaging and received tremendous response from the market. Gross profit improved by 27.53 percent in 2019 as the company passed on the impact of cost hike to its customers. The spike in cost came on the back of Pak Rupee depreciation, hike in commodity prices and fixed cost incurred due to the commencement of new production line.
GP margin greatly improved from 15.5 percent in 2018 to 17.3 percent in 2019. Distribution expense grew by 31.9 percent year-on-year in 2019 mainly on account of increased payroll expense as well as freight & cartage.
Due to the commencement of flexible packaging line, the company hired additional resources which took its headcount to 229 employees in 2019, up from 173 employees in the previous. This drove up administrative expense by 24.49 percent in 2019.
Lower profit related provisioning and no trade debts written off in 2019 unlike 2018 resulted in 32.84 percent decline in other expense. Other income also posted marginal growth of 3.48 percent in 2019 on account of higher scrap sales and gain on sale of fixed assets.
The company was able to improve its operating profit by 30.62 percent in 2019. OP margin climbed up from 12.6 percent in 2018 to 14.4 percent in 2019. The main culprit which contributed towards a drop in the bottomline was a massive rise in CPPL’s financial cost during the year.
During 2019, the company obtained both short-term and long-term loans to fulfill its working capital requirements and to invest in long-term projects respectively. CPPL’s gearing ratio spiked from 45.83 percent in 2018 to 57.4 percent in 2019. This coupled with increased markup rates escalated its financial cost by 294.94 percent.
Profit after tax plunged by 20.84 percent year-on-year to clock in at Rs. 562.87 million with EPS of Rs.13.24 versus EPS of Rs.18.87 in 2018. NP margin clocked in at 6.95 percent in 2019 vis-à-vis NP margin of 10 percent in the previous year.
2020 was characterized by the outbreak of global pandemic which halted the usual business activity. The topline of CPPL grew by 16.59 percent year-on-year in 2020 to clock in at Rs.9436.19 million.
However, the topline growth couldn’t trickle down to produce growth in the bottomline. The revenue growth mainly came on the back of increased prices and improved sales of flexible packaging. As the company uses 75 percent imported raw material, depreciation of Pak Rupee against the greenback resulted in a sharp increase in the cost of raw material.
Consequently, gross profit registered a drop of 16.20 percent year-on-year in 2020. GP margin also dropped to 12.4 percent in 2020. Despite slow economic activity and muted sales, distribution expense grew by 27.45 percent year-on-year in 2020 on the back of client relationship and brand exposure in the newly instigated flexible packaging division of CPPL.
The number of employees grew to 254 in 2020 which meant increased salaries, yet, lower rent, rates and taxes, depreciation expense, repairs & maintenance charges as well as curtailed travelling cost on account of COVID-19 resulted in a meager 1.12 percent uptick in administrative expense in 2020.
Allowance for ECL and realized exchange loss drove up other expense by 31 percent in 2020. Other income shrank by 27.84 percent in 2020 due to significantly lower dividend income earned from a related party – Cherat Cement Company Limited.
Operating profit eroded by 24.38 percent in 2020 with OP slipping to 9.35 percent. Finance cost jumped up by 54.67 percent in 2020 due to increase in discount rate until 3QFY20 coupled with enhanced working capital requirement and investment in flexible packaging project.
The bottomline dropped by 87.52 percent year-on-year in 2020 to clock in at Rs.70.23 million with EPS of Rs. 1.65 and NP margin hitting its lowest level of 0.74 percent.
2021 appears to be the most fortunate year for CPPL where it not only did its topline and bottomline enlarged; it also regained its margins which terribly dropped in 2020. During 2021, the company registered an increase of 23 percent in its overall sales volume with local sales and export sales clocking in at 318.75 million bags 15.47 million bags respectively.
Flexible packaging division also recoiled with sales volume of 4.65 million kilograms in 2021 versus sales volume of 4.3 million kilograms registered in the previous year.
The improved sales were the result of increase in construction activities during the year coupled with general economic activity gaining momentum post COVID-19. This resulted in topline growth of 19.28 percent in 2019. With improved volume and pricing, gross profit spiraled by 65 percent in 2021 with GP margin rising up to 17.2 percent.
Distribution and administrative expense grew in line with inflation and increased operations. Other expense magnified by 67.53 percent year-on-year in 2021 on the heels of increased provisioning for workers’ profit participation fund and workers’ welfare fund due to improved profitability.
Other income also posted an impressive growth of 64.90 percent year-on-year on account of government grant amortized, gain on disposal of property, plant and equipment and handsome dividend income from associated company – Cherat Cement Limited.
Operating profit expanded by 79.47 percent in 2021 with OP margin climbing up to 14.07 percent. Finance cost which had been on the rise until 2020 showed some respite in 2021 owing to a drop in discount rate and low-cost wage financing facility availed by the company during the year.
Net profit multiplied by 1117.47 percent in 2021 to clock in at Rs. 855.09 million with EPS of Rs. 20.12 and NP margin of 7.6 percent.
2022 was characterized by impressive performance in flexible packaging division boasting a 25 percent year-on-year rise in the sales volume.
Conversely, paper and pp bags division posted a 9 percent year-on-year drop in sales volume owing to reduction in local cement demand coupled with use of bulk cement which reduced the demand of packaging material.
Topline multiplied by 19.97 percent in 2022 to clock in at Rs.13,502.52 million. Depreciation of Pak Rupee and unprecedented increase in the prices of raw materials such as kraft paper, PP granules, oil and energy resulted in a surge in cost of sales; however, the company was able to pass it on to the customers which resulted in almost stagnant GP margin despite cost hike. Gross profit enhanced by 19.46 percent in 2022.
Distribution expense escalated by 30.92 percent year-on-year in 2022 due to elevated freight & cartage charges. Administrative expense also multiplied by 35 percent in 2022 due to higher payroll expense as number of employees grew from 251 in 2021 to 304 in 2022. Reduced profit related provisioning resulted in 15.16 percent decline in other expense in 2022.
Other income spiraled by 11.21 percent in 2022 due to increased amortization of government grant. Operating profit improved by 18.78 percent in 2022 with OP margin clocking in at 13.93 percent – almost at par with the last year’s level. Increased utilization of running finance coupled with higher discount rate escalated the finance cost of CPPL by 26.13 percent in 2022.
Moreover, changes in tax measures resulted in an increase in tax expense for the year. The bottomline grew by 3.56 percent year-on-year in 2022 to clock in at Rs.885.51 million with EPS of Rs.18.04. NP margin dropped to 6.56 percent in 2022.
In 2023, CPPL’s net sales grew by 22.6 percent year-on-year to clock in at Rs.16,554.26 million. This came on the back of improved sales volume of flexible packaging during the year. Due to uncertain political and economic conditions of the country, cement demand considerably declined during the year resulting in lower demand of cement bags.
The sale of CPPL’s packaging bags dropped to 247.64 million bags in 2023, down 18.46 percent year-on-year. However, sales volume of flexible packaging stood at 6.89 million kgs, up 17.58 percent year-on-year. Strict cost control measures and the ability to pass on the onus of cost hike to its customers resulted in 41.57 percent improvement in CPPL’s gross profit in 2023 with GP margin reaching its highest level of 19.80 percent. Distribution expense dropped by 3.92 percent in 2023 due to lower sales volume. Conversely, administrative expense mounted by 26.42 percent in 2023 on the back of higher payroll expense as number of employees grew to 327 during the year.
Other income magnified by 141.97 percent in 2023 on the back of hefty dividend income earned from Cherat Cement Company Limited, greater government grant amortized, bigger gain on sale of fixed assets and higher scrap sales made during the year. Superior other income greatly buttressed CPPL’s operating profit which rose by 52.62 percent in 2023 with OP margin reaching 17.34 percent.
Finance cost registered a momentous rise of 147.66 percent in 2023 on account of unprecedented level of discount rate and increased borrowings. Imposition of super tax also took its toll on CPPL’s bottomline which grew by 2.57 percent year-on-year in 2023 to clock in at Rs.908.25 million with EPS of Rs.18.50 and a reduced NP margin of 5.49 percent.
During 2024, CPPL’s topline slid by 16.52 percent to clock in at Rs.13820.15 million. This was due to reduced demand of cement and increased competition in the polypropylene bag division.
Flexible packaging performed well during the period, however, couldn’t offset the lackluster performance in the other segment. During the year, the company also sold three paper sack lines as cement industry has made a shift from paper bags to polypropylene bags.
Cost of sales declined by only 6.92 percent in 2024 mainly because of an increase in energy tariff. Gross profit dropped by 55.41 percent in 2024 with GP margin falling down to 10.57 percent.
Distribution expense inched up by 4.63 percent in 2024 due to increased salaries of sales force. Administrative expense inched up by 2.55 percent in 2024.
While payroll expense slid during the year as number of employees were reduced to 303 owing to the sale of paper sack lines during the year, higher legal & professional charges, insurance expense, vehicle running & maintenance charges as well as travelling & conveyance charges pushed the administrative expense up in 2024.
Other expense mounted by 72.35 percent in 2024 owing to the commission paid on the disposal of assets classified as “held-for-sale” and exchange loss realized during the year. However, other expense was offset by 936.47 percent bigger other income recorded in 2024 which was the result of gain on sale of fixed assets classified as “held-for-sale”. Operating profit plummeted by 34.44 percent in 2024 with OP margin dropping to 13.61 percent.
Finance cost contracted by 30.30 percent in 2024 due to massive decline in the outstanding borrowings as the company utilized the sale proceeds of its paper sack line to payback its liabilities and squeeze its finance cost amidst mounting discount rate. This resulted in gearing ratio of 25.66 percent in 2024 versus gearing ratio of 45.91 percent recorded in 2023.
Net profit tumbled by 2.46 percent to clock in at Rs.885.89 million in 2024. This translated into EPS of Rs.18.04 and NP margin of 6.41 percent.
In 2025, CPPL’s topline posted year-on-year slide of 5.84 percent to clock in at Rs.13,013.71 million. This was on account of shift of customer preference from paper-sack bags to polypropylene bags. Lower cement dispatches, purchase of cement in bulk packaging and cut-throat competition in the polypropylene bags segment also affected CPPL’s sales in 2025.
The company also reduced its prices to sustain competition. Cost of sales dwindled by 2.96 percent in 2025 – much lower than the topline decline - on account of high energy tariff.
All these factors resulted in 30.14 percent diminution in gross profit in 2025. GP margin recorded its lowest level of 7.85 percent in 2025. Distribution cost escalated by 20.13 percent in 2025 as the company is making concerted efforts to increase its market share and geographical presence in order to perform well in the face of cutthroat competition in the industry.
Administrative expense slumped by 0.18 percent in 2025 due to lower payroll expense and directors’ fee. This was despite the fact that the company expanded its workforce from 305 employees in 2024 to 322 employees in 2025. Other expense fell by 80.45 percent in 2025 mainly on account of lower commission paid on the sale of fixed assets.
Other income also diminished by 61.37 percent in 2025 due to lesser gain recognized on the sale of fixed assets. This largely included disposal of paper-sack lines III and IV during the year. Other income was huge enough to offset other expense and result in net other income of Rs.358.27 million, down 58.43 percent year-on-year.
CPPL recorded 52.89 percent thinner operating profit in 2025 with OP margin of 6.81 percent. Finance cost tumbled by 44.78 percent in 2025 due to lower discount rate and early payment of long-term loan obtained for flexible packaging line I. CPPL’s bottomline fell by 59.77 percent to clock in at Rs.356.43 million. This translated into EPS of Rs.7.26 and NP margin of 2.74 percent in 2025.
Recent Performance (9MFY26)
During the nine-month period of the ongoing fiscal year, CPPL registered 12.66 percent increase in its net sales which clocked in at Rs.11069.813 million. This was the result of the company’s continued focus on flexible packaging.
The company increased its product portfolio, enhanced customer relationships and improved operational efficiency in the flexible packaging division.
Despite increased volumes, the company recorded 0.67 percent decline in gross profit in 9MFY26 with GP margin clocking in at 8 percent versus GP margin of 9 percent recorded in 9MFY25. This was due to shortage of raw materials as well as unprecedented spike in freight charges and raw material prices due to supply chain disruptions on the back of the ongoing crisis in the Middle East.
Distribution expense surged by 16.40 percent in 9MFY26 due to increase in sales volume, greater marketing activities to increase market share and build and maintain rapport with customers as well as hike in fuel prices.
Administrative expense also mounted by 21.86 percent in 9MFY26 due to higher payroll expense on account of inflation and possible workforce expansion. Other expense dipped by 9.75 percent in 9MFY26 likely due to lesser or no commission recognized on the sale of fixed assets.
Other income also tumbled by 82.69 percent in 9MFY26 seemingly due to high-base effect as the company disposed its paper-sack lines in the previous year. Operating profit deteriorated by 43.68 percent in 9MFY26 with OP margin clocking in at 4.42 percent versus OP margin of 8.84 percent recorded in 9MFY25.
Finance cost shrank by 26 percent in 9MFy26 due to monetary easing while the company continued to utilize added financing lines to meet its working capital requirements and to finance its capital expenditure.
In the previous year, the company sold-off its paper-sack lines and received tax credit. The absence of the same in the current year also played its role in squeezing net profit in 9MFY26.
CPPL posted net profit of Rs.114.763 million in 9MFY26, down 71.13 percent year-on-year. This translated into EPS of Rs.2.34 and NP margin of 1.04 in 9MFY26 versus EPS of Rs.8.10 and NP margin of 4.05 percent recorded in 9MFY25.
Future Outlook
CPPL sold all its paper sack lines to avoid redundancies, eliminate unnecessary fixed cost and to improve its cash flow position. The company is now focusing on polypropylene and flexible packaging division with full vigor and is making efforts to grab a greater share of the market in these two areas.
The company is in the process of installation and commissioning of The Barrier Film Extrusion Line procured from Windmoller & Holscher which will greatly enhance the capacity of flexible packaging segment.
CPPL is also finalizing the installation of 2.7 MW solar panels which will keep a check on its energy cost.
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