FrieslandCampina Engro Pakistan Limited (FCEPL) announced its financial results for Q1 on April 20, 2022. The Company reported revenue of PKR 14 billion in the first quarter, showcasing 20.7% growth versus last year. The growth was led by improvement in the portfolio mix, coupled with an increase in volumes of both, the Dairy & Beverages and the Frozen Desserts segments.
Riddled with sharp increases in commodity costs due to continued inflation and the devaluation of the Pakistani Rupee, the business environment remained fraught with challenges. Consequently, the Gross Margins declined by 140bps.
However, the Company continued to drive cost-efficiencies through multiple cost-saving initiatives, which resulted in FCEPL registering a post-tax profit of PKR 664 million in Q1 vs PKR 547 million in the same period last year – an improvement of 10bps.
Committed to improving standards and nourishing Pakistan, FCEPL established the Pakistan-Netherlands Dairy Development Centre, in collaboration with the University of Veterinary and Animal Sciences (UVAS). By leveraging Netherland’s rich dairy expertise, the Centre aims to improve Pakistan’s dairy development capacity and quality by increasing production, improving food security, enhancing food-safety, and integrating sustainability in Pakistan’s dairy value chains and food landscape.
Dairy and beverages
The Dairy and Beverages segment reported a revenue of PKR 12.8 billion, registering a 19.5% growth year-over-year. The segment’s growth was led by Olper’s as it continued to strengthen its position as the market leader with ongoing brand and trade investments. The segment witnessed significant expansion in the retail footprint and E-Commerce channel during the quarter and will continue to explore new channels and route to markets to serve its customers effectively and efficiently.
To simultaneously diversify and strengthen its portfolio, and solidify its association with mornings, the Company launched Olper’s Cheese, which offers the nutritional equivalent of one glass of Olper’s milk (200g) in every slice of Olper’s cheese (20g). Additional recent launches including Olper’s flavored milk, Olper’s full cream milk powder (FCMP), Olper’s pro-cal, Olper’s cream and Tarang Elaichi, continued to accumulate market share.
Frozen desserts
With revenue of PKR 1.2 billion, the frozen desserts segment reported a growth of 34.1% vs the same period last year. Offering a value-added product at an affordable price, the Company launched the O’more Double Choco Chips Cone in 2022 at a price point of PKR 50, which was well-received in the market and is expected to grow.
Financial performance & table
The financial performance of the company for the quarter ended March 31, 2022 is summarized below:
| Three Months ended | |||
| March 31, 2022 | |||
| (Rs. in million) | 2022 | 2021 | Variation |
| Net Sales | 13,971 | 11,577 | 20.7% |
| Operating Profit | 1,184 | 964 | 22.9% |
| % of sales | 8.5% | 8.3% | 20 bps |
| Profit / (Loss) after tax | 664 | 547 | |
| % of sales | 4.8% | 4.7% | 10 bps |
| Earnings / (Loss) per share (Rs.) | 0.87 | 0.71 | |
Future outlook
The business environment remains fragile as rising inflation and currency devaluation continue to pressure profitability. However, several optimisation initiatives are being taken to improve efficiencies and manage inflation.
At FCEPL, our purpose is to transform the health and well-being of Pakistanis, now and for generations to come. We will continue to partner with the Pakistan Dairy Association (PDA) and the Government on various initiatives to educate the consumers on the potential health hazards of loose milk consumption and reinforce the positive characteristics of safe packaged milk.
Our business will continue to invest in our people, processes, and projects to deliver unparalleled value and superlative quality, driven by innovation and technology. This will strengthen our brand equity and enable us to be the preferred choice for consumers’ dairy needs and expand our profit accretive portfolio to leverage margins.
The Company remains committed to the highest standards of hygiene, food safety and sustainability and providing safe, affordable, and nourishing dairy products to millions of Pakistanis, every day.
The Company’s Annual General Meeting was held on April 20, 2022 at the Royal Rodale in Karachi. Shareholders and the Board of Directors discussed the Company’s performance in 2021 and the MD/CEO gave a short presentation on the Company’s performance.
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