February 11, 2025 – MACPAC Films Limited (PSX: MACFL), a prominent player in the film and media sector, has reported a sharp decline in its profit for the first half of the fiscal year 2025. For the six-month period ending December 31, 2024, the company posted a profit after taxation of Rs11.87 million, which marks an alarming 93.34% drop from Rs178.31 million recorded during the same period last year.
The significant decline in profit can largely be attributed to an ongoing trend of rising costs and increased operating expenses that have weighed heavily on the company’s performance. One of the most concerning metrics was the company’s gross profit, which plummeted by 43.43%. In the first half of FY24, MACPAC Films had reported gross profits of Rs580.21 million, but this figure fell to Rs328.22 million in FY25.
The primary driver behind this decline was an increase in the cost of sales. In FY25, MACPAC Films faced a 12.45% surge in its cost of sales, which reached Rs2.6 billion, compared to Rs2.31 billion during the same period in FY24. This uptick in production and operational costs contributed significantly to the erosion of the company’s overall profitability.
Despite a slight increase in revenue from contracts with customers, which rose by 1.25% to Rs2.93 billion, MACPAC Films struggled to maintain profitability due to escalating costs across various operational categories. Administrative expenses surged by 17.95%, amounting to Rs175.59 million in FY25, up from Rs148.87 million last year. Meanwhile, marketing and distribution expenses also rose sharply by 31.43%, totaling Rs93.03 million, a significant blow to the company’s bottom line.
In addition to higher operational costs, MACPAC Films also saw a dramatic drop in its operating profit. For the first half of FY25, the company’s operating profit plummeted by 83.30%, falling from Rs346.53 million in FY24 to just Rs57.88 million. The steep decline in operating profit indicates that the company faced significant challenges in managing its costs and maintaining profitability despite its revenue growth.
The company’s finance costs showed some relief, decreasing by 27.99% to Rs51.37 million. However, other income was not enough to offset the broader financial challenges, with a decline of 21.26% to Rs12.79 million. As a result, MACPAC Films reported a staggering 93.42% decrease in its profit before tax, which dropped from Rs291.30 million in FY24 to Rs19.17 million for the six months ended December 31, 2024.
Despite these financial setbacks, the company saw a notable reduction in its income tax expenses, which fell by 93.54%, from Rs112.99 million in FY24 to Rs7.30 million this year. This tax reduction provided some relief to the company’s overall profit figures, though it was not enough to offset the broader financial pressures it faced.
In terms of earnings per share (EPS), MACPAC Films reported a sharp decline, with its EPS falling to Rs0.20 in FY25, compared to Rs3.01 in the same period last year. This decrease in EPS underscores the extent of the financial strain experienced by the company during the first half of FY25.
Overall, while MACPAC Films was able to maintain positive earnings despite the sharp profit drop, its financial performance for the first half of FY25 has raised significant concerns among investors and stakeholders. With increasing operational costs and a decline in key profit metrics, the company faces a challenging road ahead in the latter half of the fiscal year.
The company has not yet provided any specific strategies to address these challenges, but investors will be closely watching MACPAC Films’ next steps as it navigates these difficult financial waters.