Founded in 2014, Pakistan Aluminium Beverage Cans Limited (PABC), the country’s first and only aluminium beverage can maker, desires to expand new customer bases in the south or central Asian states, Africa and the Middle East, to enhance export sales. In a corporate briefing session with investors, the PABC management explained that an $8 million investment was made for can making capacity expansion from 700 million to 950 million per year, to be activated by June 2022.
The Pakistan market’s demand remains approximately 1 billion cans each year, as estimated by the management. The country demands the can size, 250ml or 300ml and the former used more widely, results in 91% of the regional sales.
PABC enjoys local sales of 60% in total offtake and the residual 40% through export, out of which 35% of the export is to Afghanistan, and the remaining 5% of export goes to various international markets. The aluminium price hike is generally passed on smoothly as per contracts.
The company stated, “The overall exports outlook is positive and management is eying new customers, one more international market will be added in the next quarter.”
Based on the findings of one of the largest investment bankers and research & analysis firms in Pakistan, Arif Habib Limited (AHL), the CY22 volumes of the company can surpass the CY21 sales because of the improving economic situation due to regular payment (in cash) from Afghanistan. For now it is known that a new client, Alokozay, will primarily support the sales to Afghanistan.
Though in Afghanistan, 250ml cans have the bigger market share; 300ml also contributes 47% to sales in the country. The total demand for 250ml constructs the largest share, 76.9%, preceded by the size 300ml generating 22.2%. 330ml cans contribute 0.2% while 355ml cans exports to USA or Canada bring 0.6%.
Q1 sales already have increased on a YoY basis, with volumes sold to both Afghanistan and Bangladesh. However, the local market is expected to witness a 7-8% rise while the export will also experience a boost with new customers joining the circle.
Aluminium could not be secured that easily by PABC recently because of the rising conflicts around Ukraine and the worldwide bans on Russia disrupting the market. The company acquires 5000-6000 tonnes of aluminium each year to function.
AHL gave a statement which said that the GP margins escalated from 30.3% to 35.5% the previous year, with improved efficiency and pricing all around the year.
After considering the production rate, the management claimed that they have produced 545 million in CY21 and 434 million in CY20, showcasing a YoY hike. Q4 sales dropped due to harsh winter conditions in the Northern areas of Pakistan and Afghanistan.
The offtake ratio to Afghanistan has made 40%, +5.4% YoY, despite the change in the ministry. PABC included two more markets in its list by negotiating with Tajikistan and Bangladesh to diversify its overall offtake.
The AHL also confirmed that the company improved its leverage position compared with last year’s standard since the in-debt-equity ratio was augmented by 1.16x compared to the 1.45x the previous year. The plant was 17% more active than the earlier records, signalling the scale PABC wishes to achieve gradually.
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