Packages Limited (PSX: PKGS) reported a significant decline in its third-quarter financial performance for the year 2024. The company’s profit after tax (PAT) fell by over 45% to PKR 464.66 million [EPS: PKR 5.2] compared to PKR 847.46 million [EPS: PKR 9.48] in the same period last year (SPLY). A combination of reduced revenue, elevated administrative costs, and a substantial increase in tax expenses contributed to this decline.
Revenue and Dividend Impact
The company’s operating revenue, which includes income from dividends and rentals, showed a 19.5% decrease, standing at PKR 1.23 billion compared to PKR 1.52 billion in Q3 CY23. According to the profit and loss statement, the revenue drop is largely attributable to a decrease in dividend income, even though rental income registered an increase.
| Metric | Q3 CY24 | Q3 CY23 | % Change |
|---|---|---|---|
| Operating Revenue (PKR ‘000) | 1,225,856 | 1,523,021 | -19.51% |
Surge in Administrative Expenses
Packages Limited’s administrative expenses surged by 47.28%, reaching PKR 273.05 million in Q3 CY24, up from PKR 185.4 million in the same period last year. This increase significantly impacted the company’s bottom line as rising costs outpaced revenue gains.
| Metric | Q3 CY24 | Q3 CY23 | % Change |
|---|---|---|---|
| Administrative Expenses (PKR ‘000) | 273,046 | 185,395 | 47.28% |
Income from Financial Assets and Other Earnings
Despite overall revenue challenges, the company recorded a notable increase in other income, rising by 91.5% to PKR 40.15 million from PKR 20.97 million in Q3 CY23. Additionally, an impairment gain on financial assets of PKR 8.39 million further aided the company’s earnings in the quarter.
Decrease in Finance Costs
Packages Limited saw a 7.3% reduction in its finance costs, which amounted to PKR 423.58 million compared to PKR 456.74 million in the same period last year. The decrease in finance costs offered slight relief to the company’s financial position amidst rising expenses elsewhere.
| Metric | Q3 CY24 | Q3 CY23 | % Change |
|---|---|---|---|
| Finance Costs (PKR ‘000) | 423,584 | 456,738 | -7.26% |
Higher Tax Expenses Impact Bottom Line
A substantial increase in tax expenditures further strained the company’s net profit. The tax burden surged by 107.4%, with PKR 112.95 million paid in Q3 CY24 as opposed to PKR 54.46 million in the corresponding period last year. This increase contributed to a diminished bottom line despite the decrease in finance costs.
| Metric | Q3 CY24 | Q3 CY23 | % Change |
|---|---|---|---|
| Tax Expenses (PKR ‘000) | 112,952 | 54,456 | 107.42% |
Conclusion
The third-quarter financial results for Packages Limited underscore the impact of reduced revenue, heightened administrative costs, and increased tax liabilities, which collectively led to a 45% drop in profit. This quarter reflects the company’s need to address challenges in cost management and explore revenue-enhancing avenues to stabilize its earnings amidst current economic pressures.
