The packaging film maker’s first-quarter profit is flat at Rs705 million as gross margin slips nearly three points after an exceptional end to last year, and the Middle East war threatens raw material supplies.
KARACHI/LAHORE: International Packaging Films Ltd (IPAK) said its consolidated revenue rose 9.2% to Rs11.13 billion in the quarter ended September 30, helped by a sharp jump in exports, but profit was flat as margins came under pressure after an unusually strong end to the last financial year.
The Karachi-based maker of plastic packaging films reported consolidated profit after tax of Rs705 million for the first quarter of the 2026-27 fiscal year, against Rs704 million a year earlier. Earnings per share rose to Rs1.08 from Rs1.01.
Margins under pressure
Gross profit fell to Rs1.62 billion from Rs1.75 billion. That puts the group’s gross margin at about 14.6% of sales, down from about 17.2% in the same quarter last year, by The Lahore Times’ calculation.
A 16% fall in finance costs helped to offset the squeeze, as lower interest rates over the past two years eased the burden of the debt taken on to expand capacity. The company described profitability as “stable” in “a more challenging margin environment”.
The comparison with recent quarters is starker. IPAK said its quarterly margins reflected “the normalisation of trading conditions following the exceptional benefits” of the last two quarters of the previous fiscal year. In 2025-26 the group earned a record Rs4.95 billion, more than seven times the previous year, on sales of Rs42.17 billion, reports said. About Rs1.5 billion of that came in the first half, implying that the January-June period alone generated roughly Rs3.4 billion, or about Rs1.7 billion a quarter, more than double the latest quarter’s profit.
The company did not explain what drove those exceptional conditions. Disruption to imports during the Middle East war earlier this year is likely to have helped domestic film producers, though IPAK has not said so.
Exports rise 44%
The bright spot was exports. Group export sales rose to Rs3.52 billion, about $12.68 million, from Rs2.44 billion a year earlier, an increase of 44%. The company’s release described exports as having “almost doubled”, but the figures show growth of about two-fifths. Exports now account for about 32% of group sales, up from about a quarter in the last fiscal year.
The growth comes as Pakistan tries to diversify a goods export base dominated by textiles, and as Punjab and the federal government push manufacturers towards industry and exports. Flexible packaging is a small but growing export category, serving food, consumer goods and industrial customers in the region and beyond.
On a standalone basis, IPAK reported revenue of Rs3.42 billion and profit after tax of Rs211 million.
From expansion to optimisation
IPAK, which makes biaxially oriented polypropylene (BOPP), cast polypropylene (CPP) and polyester (BOPET) films used to package snacks, food, consumer products and labels, listed on the Pakistan Stock Exchange in June 2024. The group includes a subsidiary, PETPAK. A large capacity expansion drove growth in the last fiscal year.
Now, the company said, the focus “is increasingly on optimising its expanded manufacturing platform, improving product mix and strengthening its market presence”. That is a familiar shift for manufacturers that have added capacity: once new lines are running, profit depends on filling them at good prices.
The Middle East risk
The outlook is clouded by the war in the Middle East. IPAK warned of “heightened uncertainty around raw material availability, shipping routes, delivery timelines and costs”. Its main raw materials, polypropylene and polyester chips, are petrochemicals that Pakistan largely imports, much of it from the Gulf, where output and shipping have been disrupted by the conflict.
Management said its immediate priorities were securing continuity of supplies, maintaining operational resilience and managing working capital prudently, alongside a focus on efficiency, value-added products and exports.
The wider economy adds to the pressure. The State Bank of Pakistan raised its policy rate to 12% on Monday, reversing part of the easing that had cut IPAK’s finance costs. The International Monetary Fund expects Gulf economies to contract this year, and the World Bank has warned that household incomes remain under strain, which could weigh on demand for packaged consumer goods. Packaging makers are also exposed to the energy costs that Punjab is trying to address through battery-backed solar for industrial zones.
The results show a company that has largely held its ground after a record year, but no longer enjoys the windfall conditions that drove it. The 16% cut in finance costs and the 44% rise in exports offer some protection. Higher interest rates and supply risks from the Gulf could erode both.
The consolidated profit of Rs705 million is almost unchanged, while earnings per share rose about 7%. The difference likely reflects losses attributable to minority shareholders in subsidiaries, but the company did not provide a breakdown. Investors will look for the full accounts on the Pakistan Stock Exchange for detail on margins by product line, the share of profit attributable to owners and the outlook for raw material prices.
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