Consolidating the stellar performance of earlier three quarters, Tri-Pack Films Limited finally closed CY11 on a high. The packaging films manufacturers CY11 performance is a mix of healthy top-line growth and controlled operating expenses, as visible in the companys financials, for the year ended December 31, 2011, released yesterday. The penetration and consumption of packaged fast-moving consumer goods are increasing in the country, as witnessed in the lavish top-lines of the makers of such goods. Since Tri-Pack is a major supplier to this industry, it is benefitting from the rising demand of packaged goods, which is led by the growth momentum of the multinationals and some local businesses in the FMCG business. Tri-Packs sales cater largely to the domestic market, where its BOPP and CPP films are in much demand. During CY11, the Company raked in over Rs.10 billion in net sales, a milestone, representing a magnificent growth of 31.35 percent over CY10. The fluctuations in the international prices of crude oil and polypropylene granules - two major raw materials in packaging films production - have a direct impact on the Companys cost of sales. During CY11, the growth in cost of sales was below that of net sales, at 28.94 percent. These costs came down as percentage of revenue to 82.45 percent in CY11 compared to 84 percent in CY10. Consequently, the firms gross profits posted a growth of 44.04 percent over CY10. The gross margin also improved by 155 bps over last year to reach a healthy 17.55 percent in CY11. The operating performance is somewhat marred by tremendous growth in the firms distribution and administrative expenses. The two expenditure heads together exhausted roughly 4 percent of net sales in CY11, compared to 3.46 percent in CY10. Yet, owing to relatively smaller outlays on these expenses, the overall operating expenditures remained under control. A stellar operating performance helped the Companys operating profit to shoot up by 42.19 percent during the period under review. Hence, the operating margin rose by 104 bps to reach 13.58 percent in CY11. The operating gains have been further consolidated with a 91.6 percent growth in other income and a 40.38 percent decline in the finance costs. The head of other expenses, however, increased to Rs.90 million, showing a growth of 64.13 percent. An all-round performance helped the Companys bottom-line to grow by a whopping 58.15 percent during the period under review. Thereby, net margins improved by 132 bps to stand at 7.82 percent in CY11. As a result, Tri-Packs shareholders earned Rs.26.09 for every share held with the Company. Tri-Pack disclosed in its notice to the KSE that the Company incurred a net loss of Rs.52.533 million during CY11 on account of cash flow hedging. This brought the Companys comprehensive income down to Rs.730 million in CY11. Tri-Pack has had a good ride in CY11. Going forward, growth in demand of packaged goods, and the international prices of key raw materials would determine the growth in margins. Moreover, the expansion in BOPP films production capacity, which is expected to be operational by 2HCY12, would allow for further growth in the top-line during CY12.
==================================================== Tri-Pack Films Limited ==================================================== (Rs mn) CY11 CY10 chg ==================================================== Net Sales 10,009 7,620 31% Cost of sales 8,252 6,400 29% Gross profit 1,756 1,219 44% Distribution expenses 211 148 43% Operaing profit 1,359 956 42% Finance costs 122 205 -40% Taxation 416 228 82% PAT 782 494 58% Net margin 7.82% 6.49% - EPS (Rs) 26.09 16.49 58% ====================================================
Source: KSE announcement
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