Fauji Foods Limited (FFL), the company behind Nurpur milk and Dostea, has announced its financial results for the third quarter (Q3-2020).
Fauji Foods has posted a loss of Rs. 642.38 million for the quarter, representing a 35.25% decrease as compared to the preceding year. The company had reported a loss of Rs. 991.69 million in Q3 2019. During the quarter, the company continued its path to recovery as the net sales were reported at Rs. 2.09 billion, up by 40% as compared to Rs. 1.50 billion in the same quarter of 2019.
Similarly, the cost of sales saw an increase of 23.65% to Rs. 2.04 billion as compared to Rs. 1.65 billion. This took the company’s gross profits to Rs. 49.84 million as compared to a gross loss of Rs. 147.95 million.
The overall cost environment remained challenging, with high inflationary levels leading to a high increase in commodity costs over the last 12 months and also due to the sharp devaluation of the Pak Rupee against the US Dollar. The recovery in revenue growth was marred by high input costs and currency devaluation.
A change in higher management was seen in the company as Muhammad Haseeb Aslam was appointed as the new CEO of Fauji Foods Limited. He is the second person to be appointed as CEO this year. He replaced Sarfaraz Ahmed Rehman, the former CEO of Engro Foods.
Suban Iqbal, a financial analyst, told ProPakistani,
As expected, Fauji Foods is on the path to recovery from operating loss and has posted a gross profit after five quarters. Thanks to 34% sales Growth QoQ. FFL is expected to continue to move on the path of operational efficiency based on many recent good developments in the company. They have appointed a new CEO, who has more than two decades of sales, marketing, and executive experience in a multinational dairy company. FFL has done restructuring and re-profiling of the company’s debt with all the banks. The reduction in SBP policy rate and expected support from sponsors is a positive relief for the company for an immediate short term basis.
The finance cost of the company decreased by 20.6% to Rs. 374.40 million as compared to Rs. 47155 million in the same period last year. Recent reductions in SBP policy rate is a relief for the company for the immediate short term basis. Marketing and distribution expenses decreased by 27.75% to Rs. 212.08 million as compared to Rs. 293.40 million.
FFL reported a loss per share of Rs. 0.80 as compared with Rs. 1.23.
Nine-Month Results
During the first nine months of 2020, FFL’s losses reduced by 27.33% to Rs. 2.42 billion as compared to Rs. 3.33 billion recorded last year. It is worth mentioning that Fauji Foods has been incurring losses since 2013.
The company’s sales increased by 31.45% to Rs. 5.31 billion as compared to Rs. 4.04 billion in the same period last year. It reported a loss per share of Rs. 3.01 as compared to Rs. 4.15.
At the time of filing this report, FFL’s shares at the bourse were trading at Rs. 16.26, down by Rs. 0.11 or 0.67%, with a turnover of 32.49 million shares on Tuesday.
