Afghan trade halt to hit earnings of Pakistan’s major beverage can maker

Pakistan Aluminium Beverage Cans Limited (PABC) is expected to face weaker earnings in the final quarter of 2025 as the suspension of trade between Pakistan and Afghanistan continues with no signs of resolution, analysts said on Thursday.

Bilateral trade has remained halted since October 11 despite several rounds of talks between the two governments. With only one month left in the quarter and no progress reported, analysts cut their full-year 2025 earnings estimate for PABC by 16% to reflect a three-month loss of Afghan export volumes. The company’s target price has also been revised down 5% to PKR 124.

Analysts said the company is unlikely to reroute more than a small portion of its can exports to other markets, such as Bangladesh, as sea-based exports face stiff competition and offer lower margins.

Trade disruptions along the Pakistan-Afghanistan border have become more frequent, prompting analysts to conduct a sensitivity review for 2026.

Their estimate shows that every one-month closure would reduce annual earnings by 5%, assuming limited access to alternative export markets and steady local demand growth of 5%. A full quarter of closures would imply a 15% earnings cut for 2026.

PABC currently trades at a 2026 price-to-earnings ratio of 5.8, a discount that analysts say reflects both heightened uncertainty and a projected 32% year-on-year drop in earnings for 2027, when the company’s tax holiday ends.

The company, which held PKR 14.4 billion ($51 million) in net liquid assets as of September, has approved a plan to build a 1.3-billion-can manufacturing plant in Afghanistan.

The project, with an estimated cost of $110 million, aims to serve the country’s estimated 1.8-billion-can beverage packaging market — currently either underserved or supplied through Iran — and secure long-term supplies for existing Afghan customers who import about 500 million to 600 million cans annually from Pakistan.

However, analysts warned that production at the planned facility will rely heavily on Pak-Afghan transit trade for aluminium scrap, the key raw material.

Prolonged border disruptions could pose a serious operational threat, though shorter suspensions could be mitigated through bulk imports.

“This is a meaningful risk event for PABC,” said a Karachi-based market analyst. “Afghanistan is a major volume market for the company, and without clarity on cross-border logistics, both near-term earnings and long-term expansion plans remain exposed.”

Analysts said they are awaiting further details on the new plant’s financing structure and progress on resolving border issues before revising longer-term forecasts.