Key Takeaways
- PAKL reported net losses for three consecutive years from 2021 to 2023.
- Margins improved significantly in 2024 and 2025 after a slump in 2021.
- Export sales declined sharply due to lockdowns, affecting the company's topline.
PAKL (PSX: PAKL), a public limited company established in 1971 and engaged in leather tanning and manufacturing of leather garments, has seen its financial performance fluctuate significantly over recent years. As of June 30, 2025, the company had 3.4 million shares outstanding held by 599 shareholders.
The pattern of shareholding reveals that sponsors’ associates & friends hold a majority stake of 43.08 percent, followed closely by directors and their families with 36.18 percent. Other individuals account for 18.14 percent, while financial institutions and joint stock companies collectively own 2.55 percent, and the remaining 0.05 percent are held by Investment Corporation of Pakistan.
Historically, PAKL faced challenges in maintaining profitability, posting net losses in 2021, 2022, and 2023 due to consistent net losses since 2014. The company’s liabilities exceeded its total assets, resulting in negative working capital for all years under consideration.
In 2021, PAKL experienced a significant decline in net sales by 49.98 percent year-on-year, totaling Rs.108.36 million. Local sales showed some improvement, but export sales fell drastically by around 61 percent due to lockdowns imposed in various export destinations.
Cost of sales dropped sharply by 46.51 percent year-on-year, leading to a gross profit margin that plummeted to 3.48 percent. Operating expenses also saw a substantial decrease by 79.55 percent as the company did not book any provisioning against doubtful debts and experienced lower freight charges due to reduced export sales.
Despite these challenges, PAKL’s margins showed remarkable growth in 2024 and 2025. The company recorded a 182.88 percent year-on-year topline growth in 2020 but saw a decline of 49.98 percent in net sales to Rs.132.94 million in 2022, marking a 22.68 percent improvement from the previous year.
While PAKL managed to reduce bank charges by 55.89 percent and other income by 94.35 percent due to high-base effects, it still posted net losses of Rs.8.70 million in 2021 with a loss per share of Rs.2.56, compared to an earnings per share (EPS) of Rs.14.35 and a net profit margin (NP margin) of 22.52 percent in 2020.
The company’s performance review indicates that while the topline growth was impressive in 2020, it faced significant challenges in subsequent years due to export disruptions. However, the improvement in margins suggests a potential turnaround for PAKL.
