In 2021, Pakistan Aluminium Beverage Cans (PABC) was the hottest new company on the stock market. Their Initial Public Offering (IPO) was oversubscribed by 2.5 times, with bids made for 233 million shares against their offer to sell 93.8 million shares. Stock-hungry investors swooped in to send the price of PABC stock crashing into its ceiling of Rs 49 by the end of the book-building stage.
The company raised Rs 4.6 billion, making it the second largest IPO in the history of Pakistan. They were second only to Interloop, the hosiery company based in Faisalabad which had raised over Rs 5 billion back in 2019.
But PABC’s rise was different. Interloop was a solid family company founded in 2019 with decades of proven success. It was also one of many Pakistani companies in the textile industry. PABC was a new company founded in 2015 introducing a new product in Pakistan: aluminum beverage cans.
Their first year of production was 2017 when they immediately made a splash. With big multinational clients on board, their production that year was 700 million cans. After their IPO in 2021, they increased this capacity to 900 million cans a year, and in August 2023 they raised this capacity to 1.2 billion cans a year.
The company was flying high. With no competitor in sight and demand for carbonated drinks increasing every single year, sales and profit were up. But then came a jolt. Less than two months after their capacity expansion, war broke out between Hamas and Israel. In the ensuing months Israel launched an offensive that has since been declared genocide against the Gazan population by every international forum that deliberates on such matters. As global outrage against the atrocities increased, there was a revival of the international Boycott Divest and Sanction (BDS) movement, which calls for people to boycott companies complicit in supporting Israeli economic interests. While companies like Caterpillar and HP are on the top of these lists, in Pakistan the anger turned towards multinational companies like Coca Cola, Pepsico, and McDonalds.
The demand for carbonated beverages fell dramatically in Pakistan, and PABC was suddenly the unwitting victim in a much larger global boycott. Initially they found a way to fight back. The company turned its attention towards exports. Even before October 2023 they had been exporting to Afghanistan as well as Uzbekistan and Tajikistan through Afghan trade routes. The decreased demand simply led them to focus on selling outside Pakistan.
But then came the border closures. Recent fighting between Pakistan and the Afghan Taliban following a spate of terror attacks have seen the Torkham border shut down and trade between the two countries come to a grinding halt.
The official closure of the border took place on 12th October 2025. The most recent quarterly accounts are up to September 30th of 2025 which fail to take the closure into account. But based on how the stock market has responded, there is an expectation that the revenues will be impacted. Will the company be able to survive another shock? Profit takes a deeper dive.
The origin story
The history of cans in Pakistan is a fraught one. At the time of partition, the main material used in the packaging industry was tin. Plastics had still not seen the boom of the 1970s and 1980s.
Before partition, there were only two tin container manufacturing units in the subcontinent owned by a giant company, Metal Box of the United Kingdom. These factories were located in Bombay and Calcutta, which catered to the demand of undivided India. While they were important for commercial products as well by the turn of the 20th century, their main role was providing packaging for food used in the colonial army.
After partition in 1947, however, the Pakistan army did not have a facility making tin packaging for their food. For the first few years, Metal Box exported these items to Pakistan and the army used a few skeleton facilities which flattened and repurposed old cans. Given the severity of the situation, Metal Box decided to set up a facility in Pakistan as well. In 1953, with the collaboration of local sponsors, a production facility was established in Karachi for tin containers and cans under the name Hashimi Can Company. From its very inception, Hashimi was the largest tin manufacturer in Pakistan and had the business of the Pakistan Army, which meant it grew very quickly.
The story of the Hashmi Can Company is fascinating. For decades it was run by Gohar Ayub, the son of Field Marshal Ayub Khan, and the company eventually went down in literal flames. What is important to note is that Hashmi Cans mostly made tin packaging for army supply boxes and canned and packaged foods. Which is why when Coca Cola arrived in Pakistan in 1953, they sold their iconic beverage in glass bottles rather than in tin cans. Glass was the main material Coke used all over the world, but they had introduced tin cans as early as 1955. However, Hashmi Cans was so plagued with labour problems and constant fighting that the idea never came to the fore.
Glass remained the medium for both Coca Cola and Pepsico in Pakistan. While those glass bottles led to some iconic marketing campaigns, particularly related to cricket, cans remained elusive. Coca Cola moved away from tin cans in 1967 and began selling their product in aluminum cans. Pakistan had no aluminum can manufacturer, and the medium remained glass. When the plastics boom came to Pakistan in the 2000s and the MNCs decided they would make plastic bottles as well, that material joined the mix too. Certain retailers stocked imported cans but they were too expensive and were out of the reach of most of the market.
All of that changed around 2017. Just think back a decade and you might remember round cans of imported coke and pepsi were sold at stores like Alfatah and Esajees in Lahore above the regular plastic or glass versions. But then longer and thinner aluminum cans at local prices began showing up. These were the result of the birth of PABC.
Incorporated in 2015 and initiating manufacturing in 2017, the company saw growing demand and revenues year on year. The success was so meteoric that it got listed on the stock exchange in 2019 and saw its book building process generate Rs 4 billion. The company was set up after collaboration between Ashmore Investment Management, Liberty Group and Soorty Enterprises which still hold around 74% shares of the company.
“This was the first project of its kind in Pakistan,” says Abdullah Yousaf, the Co-Chairman of PABC. “Before this it was entirely imported cans. What this facility has done is to ensure that not only are there not any imports, but there will also be exports which will help Pakistan. With the employment benefits from this project, it is in the national interest.”
The advantage of first mover helped the company as it was able to rope in Pepsi and Coca Cola as their initial customers. After establishing themselves locally, the exports have also started to increase as Afghanistan, Tajikistan and Iraq have become the next big markets. Currently, Nestle, Muree Brewery and Mehran Brothers also count themselves as the clients who have been secured with long term contracts which are able to provide sustainable revenues into the future.
While being a monopoly in the field, the management at the company always tries to take the next big step in order to stay dynamic and flexible in the face of an issue. First making Coke and Pepsi their clients, then establishing international markets and now selling cans to companies like Nestle and Murree Brewery shows that they are diversifying themselves from any substantial risk or loss. The local bottlers had been using other packaging solutions as they were cheaper alternatives for themselves. By using cans, these bottlers are now extending the shelf life of their products while controlling the costs associated with them.
Pak Aluminum was also able to take advantage of a tax holiday that was granted to it for a period of 10 years as they were located in the Special Economic Zone in Faisalabad which expired in September of 2027. In addition to that, the management has complete control over the pricing power and control as they follow a cost plus pricing model. Any increase in the cost is passed on to the customer which guarantees that they end up making a profit.
The early years
Since the company started its manufacturing process in 2017, the revenues of the company kept growing from one year to the next. At the end of 2018, the company registered revenues of Rs 2 billion. By the end of 2023, these revenues had grown almost 10 fold to 19.7 billion. The effect of this could be seen in terms of the losses of Rs 80 crores seen in 2018 turning to profits of Rs 5.3 billion by 2023.
To understand the secret to the company’s success, the best measure of performance is the gross profit margin that was earned. In 2018, due to the higher cost of production, the company actually made a gross margin of -10.7% and net margin of -38.8%. By 2019, the company had reversed this trend making a gross margin of 22.3% in 2019 and 3% in terms of its net margin. The key raw material used by Pak Aluminum is quite simple aluminum. Specifically, it is aluminum coil which is then used to be turned into cans.
During 2018, the price of aluminum fluctuated between $2,200 per metric tonne and $1,800 per metric tonne. These prices kept decreasing throughout 2019 and 2020 hitting a low of $1,400 per metric tonne in mid 2020. Due to this decrease, the gross margin increased to 22.3% in 2019 and 30.3% in 2020. The next time the threshold of $2,200 per metric tonne was crossed was in March of 2021. The company was able to maintain its gross profit margin to some extent in 2021 as well as its recorded margin of 35.5%.
One of the biggest advantages of Pak Aluminum was the fact that it was practicing cost plus margin pricing which allowed it to pass on any increase in the cost to its customers. This was the disclosed policy as the company was the only game in town and bottlers had no other option but to absorb the increase in the price. As there were no substitutes in the market, Pak Aluminum was able to take advantage of this situation.
The year 2022 saw gross margins decrease from 35.5% to 33.4%. This was due to the fact that aluminum prices escalated from $2,200 per metric tonne to $3,500 per metric tonne in a space of one year. Due to the lag between ordering, producing and then selling the cans, the cost increase could not be passed on leading to a decrease in the margins. Prices started to ease once again through most of 2023 which allowed the company to once again see its gross margin increase back to 38.7% in 2023.
The Gaza genocide impact
Considering that the year end of Pak Aluminum falls in December, the impact of the Gaza war can be seen throughout most of the year of 2024. As Israel started to bomb the Gaza strip, there was an active movement in Pakistan which called for the boycott of Pepsi and Coca Cola. The movement went a step further in terms of outreach as there was a call to boycott all foreign products. As these were two of the biggest clients, it was inevitable that Pak Aluminum was going to face some of the brunt of these actions.
The decline in sales was drastic and obvious. It is worth looking at the sales numbers of these companies over the past few years. Last year, Profit reported that in 2023, 1.33 billion litres of carbonated drinks sold in Pakistan last year. This included all drinks produced by Coca Cola Pakistan and Pepsico, as well as carbonated drinks produced by local manufacturers such as Gourmet Cola and Cola Next. The leading company in this entire mix was Coke Pakistan, which sold nearly 567.5 million litres of carbonated drinks. Pepsico sold just over 528 million litres of carbonated drink, giving them a total market share of 39.2% compared to Coke’s 42.7%.
The total sales of carbonated drinks in Pakistan for 2023 stood at an even Rs 303 billion. In terms of revenue, Coca Cola had sales worth nearly Rs 129 billion. In comparison, Pepsi had sales worth just over Rs 120 billion. Local competitors were small participants in this pie. Gourmet Cola sold some 23 million litres of carbonated drinks, Mehran Bottlers, which makes Pakola, sold around 18 million litres of carbonated drinks, and Meezan, which makes Cola Next, sold only around 6.5 million litres of carbonated drinks. Other even smaller local manufacturers made up the remaining amount. Overall, all local manufacturers accounted for just around 17% of all carbonated drinks sold.
Now compare these numbers to the year before. In 2022, the sales revenue was significantly less for everyone involved. The total earnings for the entire industry from that year were Rs 221 billion compared to Rs 303 billion in 2023. However, the actual volume of sales fell in 2023 compared to 2022. In fact, it fell by a significant margin. In 2022 the total volume of sales for carbonated drinks was 1.64 billion litres. This fell by over 300 million litres to 1.33 billion litres in 2023. The discrepancy is for obvious reasons. Inflation increased in Pakistan, which is why companies made more revenue despite posting fewer sales. But there might be more to this data. Inflationary pressure has been ongoing in Pakistan since at least 2019, and also spiked during Covid-19 and also in 2021. Despite this, the total volume of sales never fell. In fact, sales have been steadily increasing in this segment for years. Data from Euromonitor shows increasing sales volumes for carbonated drinks since at least 2009, when total volume was just over 500 million litres.
Now fast forward to 2024, and what is the picture that we have? Well, for starters, both revenue and volume of sales have increased compared to 2023. The total revenue from sales increased to Rs 381.7 billion, but most of this can be accounted for by inflation, since carbonated beverages all say a hike in price. The volume of sales has also increased from 2023 and has gone from 1.33 billion to 1.35 billion. This is a very moderate increase, and does not come close to the growth rate pre-2023. What is even more telling is that the sales volume has not gone back up to the 1.6 billion litre mark that they had hit back in 2022. For all intents and purposes, the carbonated drinks market has lost close to 20% of its entire market.
PABC’s fortunes turn
The impact on PABC has also been clear. From 2020 onwards, the company’s growth in sales had been 42%, 96% and 39% respectively. The growth in sales in 2024 plummeted down to only 17% which does show that the boycott was having an impact. Another negative factor was that aluminum started to increase in price yet again as it went from $2,200 in January 2024 to $2,500 in December of 2024. The gross margin yet again took a hit to some extent as it fell from 38.7% to 36.5% in 2024.
With the economy seeing historically high interest rates and the company carrying out expansive selling and distribution expenses, it could be expected that its net margin would take a serious hit during 2024. Fortunately, the company had the farsightedness to invest its cash resources into profit bearing investments. Between 2023 and 2024, the short term investments of the company jumped from Rs 4.5 billion to Rs 15 billion. The effect of this investment was that even when gross profit margin decreased, other income increased from Rs 46 crores to Rs 2.2 billion in a span of a year.
This was a way for Pak Aluminum to be able to boost its profits in the face of declining margins. The earnings per share in 2023 were Rs 13.9 per share which increased to Rs 16.9 in 2024. Another shift that was seen at the company was that local sales had already started to plateau for the company. In 2022, local sales were Rs 9.5 billion making up 61.5% of its total sales. Exports only made up the remaining 38.5%. From 2022 to 2023, local sales remained more or less the same while exports surpassed local sales clocking in at Rs 11.7 billion.
By 2024, this gulf had widened further with exports valuing Rs 14.5 billion and local sales falling behind at Rs 10.2 billion. In just two years, exports had gone from 38% to 59% of sales. This was one way Pak Aluminum was able to compensate for the fall in local sales. By looking to exploit its export markets, any decrease in local sales was countered and revenues ended up actually increasing.
The current year has not closed for the company yet, however, certain conclusions can be made from its nine month ended results. The most recent figures for revenues show that sales were higher in the current period, totalling at Rs 21 billion which had been Rs 17.5 billion for the same period last year. This is a good sign which shows that there is still potential for sales to increase going forward. This was helped by a 16.7% increase in local sales and 22% increase in exports.
The bad sign was the fact that gross margin actually decreased again during this period. This was due to two facts. First of all, aluminum prices actually crossed the $2,700 per metric tonne mark after a long time which showed that the price of raw materials kept increasing. In addition to that, China had announced a new export rebate regime back in November of 2024. According to the new policy, aluminum was given an export tax rebate which made aluminum cheaper to any country importing it. After the rebate was removed, the cost of aluminum imports increased leading to higher cost.
Up until now, the company has not been able to transfer any of this increase on to their customers. The best course of action that was seen in the face of falling profits was for the company to rely on other income to boost some of its profits. Other incomes had been Rs 1.3 billion in the 9 month period of 2024 which actually increased to Rs 1.5 for the latest year. This was on the back of short term investments increasing further to Rs 18.3 billion from Rs 15 billion in 2024.
The latest crisis looms
It was seen in the past that the management was able to weather many of the issues it faced by looking towards new opportunities that were available to it. As local sales started to lag behind, exports were able to fill some of the decrease in demand. In the face of rising costs, the next course of action was to invest additional cash resources into short term investments which would complement the profits of the company. Now it seems like a new crisis is going to impact the company.
On 9th of October 2025, Pakistan carried out airstrikes in Kabul, Khost, Jalalabad and Patika. The purpose of the strikes was to target Pakistani Taliban. Pakistan alleged that Afghanistan was giving a safe haven to the terrorists including Noor Wali Mehsud who were targeted. In response, the Afghan Taliban carried out attacks on multiple Pakistani military posts along the border. After this, the ruling Taliban announced the conclusion of their side of the operation.
The cessation of hostilities was rejected by Pakistan which then launched another attack on the 12th of October with drone strikes carried out in Kandahar and Helmand provinces. This was followed by intense fighting between the two sides from 15th of October. On 19th of October, Qatar announced that a ceasefire had been reached between the two parties and extensive talks would be carried out in Qatar and Turkey.
Until 29th of October, there was a feeling that the peace talks had failed and there would be no resolution. By the next day, a new round of talks was announced as the cease fire was extended for another week. The damage that was caused due to these clashes on Pak Aluminum was that on the 12th of October, the border between the two countries was closed down. This has not been opened as of yet. The company itself threw some light on this issue with a notification sent to the exchange on 15th of October. The company stated that “We would like to apprise….out esteemed stakeholders of certain recent developments in the regional landscape affecting Pak-Afghan trade routes. In view of the current tensions and hostilities along the border, all border crossings have been closed for commercial activities.”
The statement went on to say that “Our company values its established trade connections with partners in Afghanistan and Central Asia, which form an integral part of our diverse sales activities. In the event that this closure persists, it may present some considerations for our sales performance in these areas. We are attentively following the situation, always with a focus on upholding the trust and expectations of our shareholders and clients.”
In order to quantify the damage that can be caused, the exports made till 2024 can be used as a proxy. In 2024, local sales were worth Rs 10 billion while exports came in at Rs 14.5 billion.
Breaking down exports to regions, out of the total exports, Rs 12 billion were made in Afghanistan alone. This makes up around 83% of total exports. Rs 12 billion of export means that every month the company is selling Rs 1 billion worth to Afghanistan alone. Everyday the border is closed, the company is losing Rs 3.3 crores in daily sales. The border has officially been closed for 25 days now and there is no prospect on the horizon of the border being opened anytime soon. Back of the envelope calculations mean that the company has already lost out on Rs 75 crores in revenues alone.
Add to this the fact that exports are also being sent to Uzbekistan, Tajikistan and Iraq which are being facilitated by the route that goes through Afghanistan. By a conservative estimate, these exports are worth another Rs 1.8 billion which is not being carried out. The remaining exports are being sent to Bangladesh and other regions which only constitute 4% of the company’s exports.
Not only have the sales been impacted by the recent border tensions, aluminum prices are also persistently increasing as they are trading at around $2,850 per metric tonne currently. It seems like the situation has turned into the perfect storm for the company and it has to take on all these challenges at the same time. The increase in the cost of aluminum, the rebate being removed by China and now the border closure seems to have all hit at the same time.
The company itself is recognising that it has little it can do even when it holds such a dominant position in the canning industry. Having a large client base extended over different countries and being the only supplier in the industry would be a dream for any producer or manufacturer. The analysis that has been carried out shows that it is all but a mirage. Once the situation is looked into, the reality is far more nuanced to be painted in white and black.
Pak Aluminum started off with a bang and was having some of its best performance in its initial years. Being the dominant company in the canning industry, it had the enviable position of limitless growth in its future. Sadly, once things turned for the worse, it ended up facing falling demand and increasing costs. Being able to expand into new markets, it was able to weather some of its troubles. Only to be hit with new challenges coming altogether at once. The future of the company lies in how well it is able to handle these lean times and able to come out through to the other side.
