Bunny’s Limited FY2026 results: revenue grew, but margins and earnings lost ground

Bunny’s Limited (PSX: BNL) delivered another year of sales growth in the audited year ended June 30, 2026, but the quality of that growth weakened. Net revenue rose 8.4% to PKR 8.00 billion. Profit after tax, however, fell 58.9% to PKR 127.3 million, and earnings per share dropped to PKR 0.19 from PKR 0.46.

The main issue was not demand. Management says revenue growth was mainly quantitative, and actual production increased in both bakery and snacks. The pressure appeared further down the income statement: cost of sales grew faster than revenue, selling and distribution expense rose sharply, the prior year’s loan-restructuring and disposal gains did not recur, and the levy-and-tax charge increased.

The result is therefore mixed rather than uniformly weak. Bunny’s preserved volume growth, reduced finance cost, brought down short-term borrowing and materially improved its year-end cash-equivalent position. But gross and operating margins narrowed, working capital absorbed cash, and the board skipped a dividend. FY2027 needs to show that volume growth can again translate into recurring profit and cash.

Results at a glance

• Audited net revenue rose 8.4% to PKR 8.00 billion from PKR 7.38 billion.
• Gross profit increased 5.3% to PKR 2.04 billion, but gross margin fell to 25.48% from 26.22%, a contraction of 74 basis points.
• Operating profit declined 7.6% to PKR 466.5 million; operating margin fell to 5.83% from 6.84%.
• Finance cost decreased 13.9% to PKR 172.9 million, helped by lower markup on short-term finance.
• Profit after tax fell 58.9% to PKR 127.3 million; EPS was PKR 0.19 versus PKR 0.46.
• Net cash from operating activities declined 21.8% to PKR 158.0 million, while inventory rose 41.4% to PKR 688.0 million.
• Bakery production increased to 14,100 tonnes from 13,500 tonnes; snacks production rose to 900 tonnes from 800 tonnes.
• No dividend was declared for FY2026.

What improved

The clearest positive was the continued expansion of the top line. Revenue increased by PKR 620.9 million, and management attributes the advance mainly to higher quantities rather than simply higher prices. The capacity data is consistent with that account. Bakery utilization improved to about 76.2% from 73.0%, based on 14,100 tonnes of production against 18,500 tonnes of annual capacity. Snacks utilization rose to about 40.9% from 36.4%, although the company says demand still constrained the snacks division.

The sales base is concentrated but easy to understand. The company reports one operating segment, all sales are local, and bakery products generated 90% of revenue while snacks contributed 10%. Bread and buns are described by management as relatively inelastic essentials. That offers some demand resilience, but the low snacks utilization shows that resilience is not uniform across the portfolio.

Finance cost moved in the right direction. Total finance cost fell by PKR 27.9 million to PKR 172.9 million. Markup on short-term finance dropped to PKR 62.9 million from PKR 100.5 million, more than offsetting the increase in markup on long-term finance to PKR 91.9 million from PKR 83.4 million. This is important because financing relief partly cushioned the decline in operating profit.

Liquidity also ended the year in better shape. Current assets rose to PKR 1.58 billion while current liabilities fell to PKR 1.28 billion, producing a current ratio of about 1.23 times versus roughly 0.98 times a year earlier. Cash and bank balances increased to PKR 86.0 million from PKR 35.2 million. After subtracting running finance, the cash-equivalent deficit narrowed to PKR 38.8 million from PKR 533.0 million.

Interest-bearing loans and lease liabilities, using the stated current and non-current balances, were approximately PKR 1.03 billion at June 2026 versus PKR 1.08 billion at June 2025. The mix shifted: short-term borrowings fell 26.3% to PKR 418.5 million, while long-term finance and lease liabilities increased. That reduces immediate refinancing pressure but does not eliminate leverage or interest-rate sensitivity.

What weakened / needs attention

Gross profit grew, but not enough to keep pace with sales. Cost of sales increased PKR 517.5 million, or 9.5%, compared with 8.4% revenue growth. Raw material consumption rose 8.0% to PKR 3.83 billion, packing material consumption increased 11.2% to PKR 641.6 million, and production wages climbed 16.6% to PKR 718.2 million. Annual fuel and power expense actually edged down 1.1% to PKR 437.5 million, so the filing does not support a blanket claim that full-year energy expense increased.

Management says higher flour and packing-material costs hurt profitability and specifically points to fuel-price pressure late in the year. It also links packing-material and fuel disruption to regional conflict and says wheat traded above government-fixed prices. These are management’s explanations, not a quantified price-volume-mix bridge. The reported line items confirm cost pressure, but they do not isolate how much came from wheat prices, packaging, fuel, product mix or timing.

Below gross profit, selling and distribution expense was the biggest recurring drag. It increased 13.0% to PKR 1.16 billion. Vehicle running and maintenance rose to PKR 522.3 million from PKR 469.3 million; commissions and sales incentives rose to PKR 418.4 million from PKR 368.5 million; and selling salaries increased to PKR 150.0 million from PKR 113.5 million. Advertisement expense fell, but that saving was not enough to offset the broader distribution increase.

The arithmetic from gross profit to operating profit is revealing. Gross profit improved by PKR 103.4 million, while administrative and selling expenses together rose by PKR 141.9 million. Operating profit consequently fell by PKR 38.5 million to PKR 466.5 million. The operating margin contraction of roughly 101 basis points therefore reflects both manufacturing-cost pressure and a heavier distribution burden.

The prior year also benefited from unusually high other income. FY2025 included PKR 39.5 million of gains on loan restructuring and PKR 40.7 million of net gains on fixed-asset disposals. In FY2026, other income was only PKR 11.5 million, including PKR 6.8 million from asset disposals and PKR 4.7 million of deferred-grant amortization. The PKR 73.4 million fall in other income was non-operating, but it was material to the year-on-year earnings decline.

Profit before levy and tax fell 24.2% to PKR 273.7 million. The minimum-tax levy increased to PKR 36.7 million from PKR 21.8 million, leaving profit before income tax of PKR 237.0 million. Income-tax expense then rose to PKR 109.7 million from PKR 29.6 million, including PKR 42.9 million of deferred tax versus a PKR 63.3 million deferred-tax reversal in FY2025. Combined levy and income-tax expense was PKR 146.4 million, nearly three times the prior year’s PKR 51.4 million. That tax swing explains a large part of why the 24% decline before levy and tax became a 59% decline in net profit.

Cash flow and working capital

Cash generated from operations before financing costs and taxes declined 29.7% to PKR 514.4 million. Operating profit before working-capital movements was PKR 627.3 million, but working capital absorbed PKR 112.8 million after contributing PKR 33.6 million in FY2025. The largest use was a PKR 201.3 million inventory build; trade receivables used another PKR 44.2 million. A PKR 127.9 million reduction in advances and prepayments partly offset those outflows.

After finance cost, tax, levy, gratuity and statutory fund payments, net operating cash flow was PKR 158.0 million, down from PKR 202.1 million. That still covered the year’s PKR 52.6 million of property, plant and equipment purchases. Asset-disposal proceeds of PKR 100.4 million caused net investing cash flow to be positive, but asset sales should not be treated as recurring operating cash generation.

The inventory increase deserves close attention because it grew much faster than sales. Management also says suppliers reduced credit days, increasing working-capital needs. Those two facts make cash conversion a central FY2027 test. The annual filing provides full-year cash flow, not a discrete fourth-quarter cash-flow statement, so no conclusion should be drawn about quarter-only cash conversion.

Longer-run context

Bunny’s has expanded meaningfully over the cycle: revenue rose from about PKR 3.57 billion in FY2021 to PKR 8.00 billion in FY2026. Earnings have been much less stable. Profit after tax was about PKR 178 million in FY2021, PKR 139 million in FY2022, PKR 132 million in FY2023, a PKR 108 million loss in FY2024, PKR 310 million profit in FY2025 and PKR 127 million in FY2026.

That history shows a business capable of compounding sales but exposed to sharp swings in margins, finance costs, tax effects and non-operating gains. FY2025 represented a strong rebound from the FY2024 loss; FY2026 preserved revenue momentum but surrendered much of that earnings recovery. The structural question is whether scale can produce steadier operating margins rather than only a larger sales base.

AlphaGen model scores

• Alpha QoQ Score: 19.65
• TTM Performance Score: 19.65
• 3Y Business Perf Score: 67.16
• Sector Leadership Score: 22.7332

These are AlphaGen model outputs, not figures reported by Bunny’s Limited. The low recent and trailing readings are directionally consistent with weaker profitability and cash conversion in FY2026, while the stronger three-year score reflects the broader recovery from FY2024. The scores should be read as analytical signals, not as investment recommendations.

What to monitor next

• Gross margin: whether price increases, sourcing or product mix can recover the 74-basis-point FY2026 decline.
• Distribution efficiency: whether vehicle, commission and sales-staff costs grow more slowly than revenue.
• Inventory and supplier terms: whether the PKR 201.3 million working-capital absorption reverses without disrupting availability.
• Financing mix: whether lower short-term borrowing produces another sustained reduction in cash finance cost.
• Tax normalization: whether the deferred-tax charge and minimum-tax levy remain unusually heavy relative to pre-tax profit.
• Capital allocation: whether operating cash supports reinvestment and permits the board to reconsider dividends after skipping FY2026.
• Product utilization: continued bakery growth is positive, but the snacks division remains below half of stated capacity and needs evidence of stronger demand.

Evidence, accounting basis and limitations

The analysis uses Bunny’s Limited’s audited financial statements for the year ended June 30, 2026, reported in Pakistani rupees on a single-company basis. The external auditor issued an unmodified opinion and identified revenue recognition as a key audit matter. Percentage changes and margins above are recalculated from the reported statements; small differences can arise from rounding.

Evidence coverage is pass with disclosed limitations. The current annual earnings, balance sheet, cash flow, capacity, segment mix and comparative FY2025 figures are supported. The filing does not quantify pricing, volume and mix separately; it does not provide a discrete fourth-quarter cash-flow statement; and management’s explanations for input and supply-chain pressure are not independently apportioned to individual expense lines. Those gaps do not prevent a defensible annual-results assessment, but they limit causal precision.

Primary evidence: Bunny’s Limited’s audited FY2026 annual report, the PSX company and announcement record, and the issuer’s annual-reports archive. Pakistan Bureau of Statistics price data is a useful macro monitor, but it is not used here as a substitute for the company’s own input-cost disclosures.

This article is analytical commentary on reported financial results. It is not buy or sell advice.