PACKAGES LIMITED –

FINANCIAL STATEMENTS
ANALYSIS

SYED MUHAMMAD TAHA ALI

ABDUL WASEY OMAR
INTRODUCTION

• A PAKISTANI MULTINATIONAL COMPANY BASED IN LAHORE

• FOUNDED IN 1956

• FAMOUS FOR ITS MAJOR BRAND ‘ROSE PETAL’.

• EMPLOYS OVER 2000 PEOPLE

• FLAGSHIP COMPANY OF SYED BABAR ALI GROUP OF COMPANIES

OVERVIEW OF COMPANY’S INVESTMENTS

• PACKAGES LIMITED HAS INVESTED IN MULTIPLE FIELDS OF BUSINESSES

• LEADING MANUFACTURERS OF PAPER AND BOARD, CONVENTIONAL
PACKAGING MATERIAL, TISSUE PAPER, PRINTING INKS, ETC.
• IMPORTANT BUSINESS PARTNERS INCLUDE NESTLE, COCA-COLA, UNILEVER,
TETRAPAK
• PACKAGES LTD ALSO OWNS OTHER COMPANIES LIKE MILKPAK, TULLO
COOKING OIL AND PACKAGES MALL
IMPORTANCE OF FINANCIAL STATEMENTS

• FINANCIAL HEALTH

• BUSINESS PERFORMANCE

• CASH FLOWS

• IMPORTANT FOR VARIOUS STAKEHOLDERS – COMPANY ITSELF,

BANKS, SHAREHOLDERS, EMPLOYEES, ETC.

• USE OF DIFFERENT RATIOS FOR BUSINESS ANALYSIS –

PROFITABILITY, LIQUIDITY, DIVIDEND AND GEARING RATIOS
PROFITABILITY RATIOS – GROSS PROFIT

• Gross Profit Margin = (Gross Profit / Net Gross Profit Margin (%)
25
Sales) x 100
20.98 21.49
• Gross Profit Margin highest in 2016 – 21.49% 20 19.7

• Decrease in the profits after 2016 15.85

15
14.68
• Volumetric sales grew however
10
• Costs of production increased in 2017 – raw
materials 5

• Higher advertising costs – 2017

0
2014 2015 2016 2017 2018

Gross Profit Margin

PROFIT BEFORE TAX

45 • Similar trend as compared to Gross Profit Margin

41.34
39.99
40 • A sharp rise till 2016 followed by a drastic decline
35
• Higher costs – 21% increase
30
• More Investment – upgradation of flexible packaging
25 23.73
line
20 18.22
16.64
• Higher expenses in 2018 as a result of rupee
15

10
devaluation

0
PBT (%)

2014 2015 2016 2017 2018

ASSET TURNOVER RATIO

4.5
4.18 4.27 • Turnover Ratio = Net Sales / Average Total Assets
4.07
4 3.92
3.67
• Total assets turnover ratio remained low over the
3.5

3
years

2.5 • Reached a maximum of just 0.3% in 2018

2 • This depicts low efficiency of generating sales
1.5 revenue using total assets
1
• Fixed assets turnover ratio fluctuated
0.5 0.25 0.28 0.27 0.27 0.3 • Lowest in 2018 at 3.67%
0
Total Assets Turnover Fixed Assets Turnover

2014 2015 2016 2017 2018

 LIQUIDITY RATIOS
Current Ratio Linear (Current Ratio)
Quick Ratio Linear (Quick Ratio)
• Current Ratio = Current Assets / Current Liabilities
1.8 1.71
• Declining trend of both current and quick ratio 1.67
1.61
1.6 1.52
• Highest figures recorded in 2017
1.4
• 1.71% current ratio while 1.2% quick ratio 1.2
1.21.13 1.15
1.07 1.07
• Current ratio reached 1.07% while quick ratio fell to
1
0.67% in 2018 – indicates that packages could face
0.8
0.67
difficulties in meeting its short term obligations
0.6
• Main reason is the rise in expenses in 2018
0.4

0.2

0
2014 2015 2016 2017 2018
INVESTMENT RATIOS - EPS

EARNINGS PER SHARE

• EPS = Net Income / Outstanding Shares
Basic EPS Diluted EPS
160
• Basic EPS higher than diluted EPS

140 65.02 • Increasing trend till 2017

58.45
120 • Maximum EPS in 2017 – 69.05
100 • Sharp fall to Rs. 29.69 from Rs. 69.05 in 2018
80 33.62 69.05 • Low EPS resulted due to economic changes –
62.61 29.18
26.59
60
currency devaluation
40 37.42
29.89 29.69 • Higher expenses
20

0
2014 2015 2016 2017 2018
 P/E RATIO

P/E RATIO
25
22.7

• P/E = Share price/ earnings per share

20

15.56 • Shows current investor demand

15 13.58 13.03
• Optimal average between 13-15
10
7.38
• Fall in 2017
5
• Rose again in 2018
0
Price Earning Ratio

2014 2015 2016 2017 2018

INTEREST COVER RATIO

20
17.96
18

16
• Interest cover ratio = EBIT / Interest expense
14

12

10 • Measure of the ability to honor its debts

7.87
8 7.08
6.43
6
4.67 • Higher ratio means better financial health
4

0
Interest Cover Ratio

2014 2015 2016 2017 2018

DIVIDEND YIELD & DIVIDEND COVER
RATIOS
Dividend Yield Linear (Dividend Yield)
Dividend Cover Linear (Dividend Cover)
• Dividend yield = Annual dividends per share /
7
share price
6 5.88

5
• Cover ratio = dividend per share / eps
4
3.23 3.36
2.94
3
2.58
2.46 2.5
2.32 2.35
• Stable payout ratio and high dividend yield is 2
attractive to investors 1.32
1

0
2014 2015 2016 2017 2018
GEARING RATIOS - ROE

• ROE = Net income / shareholder’s equity 12

10.6
10
9.47
• Shows ability to generate profits 8
6.9
6
5.07 4.85
• Positive relationship with gross margin 4

2
• Similar graph to gross margin ratio
0
2014 2015 2016 2017 2018

Return on Equity
DEBT TO EQUITY RATIO
120

100 • D/E = Total liabilities / shareholder equity

80

60 • Graph shows company assets mostly financed

92 92 93 95 96
through equity
40

20

0
8 8 7 5 4 • Should be below 2
2014 2015 2016 2017 2018

Debt Equity
CONCLUSION

• MOST FINANCIAL RATIOS HAVE SHOWED A POSITIVE AND

HEALTHY FINANCIAL PERFORMANCE UNTIL 2016

• AFTER 2016, THERE HAS BEEN A FALL IN PROFITS, DIVIDENDS PER

SHARE AND EPS ALONG WITH THE LIQUIDITY RATIOS RAISING
CONCERNS ABOUT THE FUTURE

• CURRENT ECONOMIC CONDITIONS – CURRENCY DEVALUATION,

POLITICAL INSTABILITY, DON’T LOOK FAVORABLE FOR
PACKAGES LIMITED
THANK YOU!