KARACHI - Packages Limited recorded a PAT of Rs22mn (EPS Re0.26) against Rs313mn (EPS Rs3.72), showing a sharp decline of 93% YoY. Rise in input/energy costs coupled with increasing interest rates are some of the factors contributing to the bottom-line decrease. There were multiple reasons which gathered simultaneously to hit company's bottomline severely during 1QFY08. First, dep. charges rose by 151% YoY, eroding accounting profits during the period (due to startup of Paper Mill-6 in Kasur). However, if analyze EBITDA margin, it stood at 17% - revealing only 3.7ppts decline YoY. Secondly, the decline in core margins was also contributed by 101% YoY rise in fuel & power costs (as company used furnace oil during first 2MCY08 amid absence of gas, FO prices rose by 60% YoY during the period). Thirdly, pulp and petroleum based raw material prices in the international market were skyrocketing which cumulatively led to Rs60m rise impact in raw material cost. Finally, financial charges rose by massive 701%, however, the bottomline impact was soothed by fat other income of Rs325m received by the company. The pass-on process of cost increase has been coming along but with a lag effect, following the rapid increase in raw material prices. The topline remained robust growing by massive 38% YoY, based on paper & paperboard, packaging material and tissue consumer products segments by 49%, 20% and 12% YoY, respectively. The topline growth can be attributed to expansion of PM-6 Kasur. The exports have also recorded massive 306% YoY rise as the company exported paper to Sri Lanka and Saudi Arabia. PKGS is planning to export paper to African markets as well. Analysts said that the land value of the company's existing plant situated at Ferozpur Road re is still being largely unnoticed. Keeping the attractiveness of the area in mind, our estimate for the land value comes to around USD200mn which would add value to the company even in the absence of any plans.