FrieslandCampina Engro Posts a Loss Despite Highest Ever Volume Growth of Olper’s

FrieslandCampina Engro Pakistan Limited (FCEPL) announced its financial results for the first quarter ended on 31st March 2020.

The company has reported a loss of Rs. 130.62 million as compared with a profit of Rs. 83.45 million in Q1 2019.

However, it reported an increase in sales to Rs. 9.80 billion as compared to Rs. 8.61 billion last year. It recorded a 6th consecutive quarter of strong double-digit topline growth and registered a 14% growth over the same period last year.

Despite local milk pricing pressure, the company increased prices across its portfolio, over the last 6 months, to offset the impact of currency devaluation and inflation. Subsequently, the gross margin improved significantly by more than 200 bps over Quarter 4, 2019.

According to the company’s statement, the business climate remained challenging in Pakistan with record breaking inflationary levels (14.6% in January) that has led to a steep increase in commodity costs.

Finance costs rose by more than 62% to Rs. 379 million as compared with Rs. 232.60 million due to a sharp increase in interest rates which stood at an average of 14% for the quarter.

This increase had a negative impact of approximately Rs. 146 million on profitability. It reported a loss per share of Rs. 0.17 as compared to earnings per share of Rs. 0.11.

The company stated that March sales have been significantly affected by the closure of the retail & leisure sector, especially for the high-margin Ice cream business. The country has been in a state of lockdown for most of March, which has affected the route-to-market. Despite logistical challenges and volatility in the operating environment, the company has managed to maintain its supply chain operations and ensure consistent supply to customers.

The projected growth and profitability for the quarter experienced a steep decline due to the unexpected and rapid rise of COVID-19, as it affected the retail landscape all across Pakistan.

Olper’s Posts Highest Ever Volume

Despite this, FCEPL’s largest brand Olpers continued to register strong volumetric growth (including highestever volumes in February) and consolidated its market share leadership by 415bps vs. its largest competitor. FCEPL also launched Tarang Tea Whitening Powder (TWP) during the quarter.

The company’s other recent launches – Olper’s full cream milk powder (FCMP), Olper’s Cream, Olper’s Pro-Cal and Tarang Elaichi. The company is also focusing on the ice cream business as well.


As a dairy company, FCEPL expects a challenging operating environment in the short term, especially for the Ice cream business. In the medium term, a decline in consumer purchasing power may affect the business adversely.