Pakistan Aluminum Beverage Cans Ltd (PABC) held its analyst briefing yesterday to apprise investors on the CY23 results and future outlook. Following are the key highlights:

·         Net Sales for CY23 stood at PkR19.7bn (up 39% YoY), while gross margins also improve to 38.4% during the outgoing year (vs. 33.4% in SPLY). Exports took up 48% of the total revenues during the period (vs. 42% in SPLY) .

·         Can volumes clocked in at 812mn during CY23, marking an increase of 12%YoY. Capacity utilization for the year stood at 95% (vs. 88% in SPLY).

·         Company’s can manufacturing capacity was enhanced to 1,200mn cans/p.a. in Jan’24 (up from 950mn cans/p.a.). Management noted that the said increase would enable PABC to meet peak season demand moving forward.

·         Management expects sales revenue of ~PkR17bn in FY24E, with annual volumes reaching 750mn cans. The decline is attributable to reduced demand in the local market, alongside ongoing geopolitical conflicts in the Middle-East region.

·         Demand for cans in Afghanistan has been gradually picking up post the regime change in CY21, and company vows to add more partners in the region. To note, the Afghan market for cans is 800mn cans/p.a. However, the recent disallowance of cargoes to/from Chaman border has hampered company’s export volumes to Afghanistan.

·         Domestic beverage market size is 6.5-7.0bn liters, however, industry sales stood down by 25%YoY during CY23. With regards to export opportunities, company vows to diversify its export sales to Bangladesh and Uzbekistan, though these efforts are still in the nascent stages.

·         Management stated that the company’s end-product prices must remain competitive (at the expense of margins) to compete with established regional players in India, UAE, and Iran.

·         Management expects demand for cans to recover swiftly once inflation and business activity revive, alongside the cooling down of the ongoing boycotts.

 Courtesy – AKD Research