Tri-Packs Stellar Performance

As FMCGs laugh all the way to the bank, it appears they are taking their suppliers along. Tri-Pack Films Limited is among the beneficiaries of the consumer goods boom as is evident from the stellar growth witnessed in the companys top line.
Net sales for the company increased by 40 percent over the previous quarter - the largest jump quarter-on-quarter, in the companys sales; ever!
In comparison, cost of sales remained tame, registering an increase of 32 percent compared to same period last year. The major irritant under this head was the rising international price of polypropylene granules.
The gross margins improved by 4 percentage points to 18 percent during the same period and gross profit climbed to Rs441 million.
Operating profits nearly doubled over last year to Rs320 million and operating margins also added on 4 percentage points to reach 15 percent in the quarter under consideration.
Repayment of a major chunk of term finance facility last year (obtained for the Port Qasim plant) caused a decline in finance costs of the firm by 44 percent in this quarter. A hefty tax payment of Rs100 million was also booked for the period under review.
Nonetheless, Tri-Pack was able to translate gains made through stellar operating performance into a 121 percent increase in profits, which are at the all time high level.
Tri-Pack is on course to improve its financial performance further. Encouraged by the expanding market for packaged goods, the company is investing Rs. 5.2 billion in a new BOPP plant, which is expected to be operational in 2HCY12.
Stringent crackdown on smuggling through Afghan Transit Trade also bodes well for the company. Thus, the outlook for the companys margins and earnings remain bright for the rest of the year.

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Tri-Pack Films Limited

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Rs (mn)                   1QCY11  1QCY10      Chg

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Net Sales                  2,390   1,718      39%

Cost of sales              1,948   1,480      32%

Gross profit                 441     238      85%

Gross margin                 18%     14%      33%

Operating profit             350     182      92%

Operating margin             15%     11%      38%

PAT                          192      87     121%

EPS (Rs)                    6.41    2.91     120%

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Source: KSE notice