Shams ul Nisa

The tax exemption given to companies operating in the Special Economic Zones (SEZs) under the Finance Act 2024 has created a favourable environment for Pakistan Aluminium Beverage Cans Limited (PABC) to grow and expand both domestically and internationally, reports WealthPK.

The government’s move aims to boost economic growth and support businesses facing difficult market conditions. One of the key provisions is the minimum tax exemption for companies operating within SEZs to help attract investment and improve the competitiveness of local industries by lowering their tax obligations. PABC, which operates in Faisalabad Special Economic Zone, can reinvest in manufacturing upgrades and explore new market prospects due to reduced tax obligations. Established in 2014, PABC primarily focuses on manufacturing and selling aluminium cans.

The company began commercial operations in September 2017 after completing installation, testing, and commissioning of its manufacturing facility at Faisalabad Special Economic Zone. As a result of this legislative change, PABC is likely to experience an uplift in its financial performance, allowing for more focus on growth and streamlining operations. According to the company’s financial report available on the Pakistan Stock Exchange, it reported a net sales growth of 5.86%, reaching Rs17.51 billion in the first nine months of the ongoing calendar year (9MCY24) compared to the same period of 2023.

However, the domestic volume declined by 5.64% due to inflationary pressures. This drop in local revenue was offset by an increase in export sales. Thus, the gross profit margin decreased to 37.68% in 9MCY24 from 39.15% in 9MCY23, primarily due to higher export sales, inflation and increased costs. During the period under review, the profit-before-tax totalled Rs5.29 billion compared to Rs4.4 billion in the same period last year. Hence, the company recorded a net profit of Rs4.47 billion in 9MCY24.

Furthermore, the net profit margin for the period stood at 25.54%, with earnings per share rising to Rs12.38 in 9MCY24 from Rs11.62 in 9MCY23. As demand for aluminum beverage cans grows both locally and globally, PABC is focused on increasing its export market. Thus, the management is optimistic that the tax relief will help enhance operational efficiency and drive the development of innovative production methods.

However, the company faces several challenges, including inflationary factors, geopolitical tensions in the Middle East, and the recent imposition of a 2% Infrastructure Cess by the Khyber Pakhtunkhwa government on exports. To mitigate these challenges, PABC is focusing on enhancing operational efficiencies and expanding its export markets. As the company navigates market challenges, its strategic focus on operational efficiency and market expansion will be key drivers of success.

PABC's robust financial performance for the nine months ending September 30, 2024, demonstrates its commitment to sustainable growth and long-term stability in Pakistan's competitive beverage can manufacturing sector. Looking forward the company is actively seeking partnerships with international distributors and exploring opportunities in emerging markets. Additionally, PABC is committed to maintaining strong relationships with stakeholders to ensure a steady supply of raw material at competitive prices.

Credit: INP-WealthPk