February 26, 2026 (MLN): Merit Packaging Limited (PSX:MERIT) reported a net profit of Rs129.46m for the half year ended December 31, 2025, which marks a significant turnaround from the Rs68.21m net loss recorded in the same period last year.

The company's earnings per share improved to Rs0.65, recovering from a loss per share of Rs0.34 in the corresponding period of the previous year.

The company's core top-line took a major hit, with revenue plunging 42% year-on-year to Rs1.78bn from Rs3.05bn.

Cost of sales decreased 40% to Rs1.70bn from Rs2.85bn.

Because the drop in revenue outpaced the reduction in costs, gross profit plummeted 61% to Rs76.35m from Rs197.95m in the prior period.

Consequently, the gross profit margin contracted to 4.3% from 6.5% in H1 FY2025, reflecting severe pressure on core operational profitability.

General and administrative expenses increased 16% to Rs95.19m from Rs82.33m, while selling and distribution expenses decreased 11% to Rs47.70m from Rs53.52m.

Other operating expenses rose 85% to Rs10.90m from Rs5.89m, and other income grew 46% to Rs21.32m from Rs14.55m.

Weighed down by the plunging revenue and gross profit, the company swung to an operating loss of Rs56.12m, compared to an operating profit of Rs70.76m in H1 FY2025.

However, the financials were completely rescued by a massive one-off gain on the disposal of assets classified as held for sale, amounting to Rs505.66m.

This single line item was the sole driver that flipped the company back into profitability.

Financial charges decreased significantly by 40% to Rs60.41m from Rs100.63m, providing further relief.

The company recorded a substantial taxation expense of Rs193.52m, compared to nil tax expense in the corresponding period last year.

Ultimately, while Merit Packaging's core operations struggled heavily evidenced by the 42% drop in revenue and the resulting operating loss the massive one-off gain from asset disposal successfully masked these operational weaknesses and pushed the bottom line firmly into positive territory.