Business Performance Overview
FrieslandCampina Engro Pakistan Limited (FCEPL) announced its financial results for Q3, 2023. The company delivered strong topline growth of 40% despite the challenging operating environment and economic slowdown.
The Company generated revenue of PKR 73.8 billion for the nine months ended, compared to PKR 52.8 billion in the same period last year, fueled by both volume and value growth.
The Company witnessed gross profit growth of 23 %, while the gross margin declined by 200 bps due to inflationary pressure on commodities and energy prices. In Q3’23, the gross margin declined by 458 bps compared to the same period last year, primarily attributable to one-offs in the preceding year, in addition to the aforementioned factors.
The operating margin only declined by 13 bps over last year due to initiatives such as cost rationalization and driving efficiencies across the value chain. However, the profit after tax (Rs. 1.57 billion vs. Rs. 1.77 billion in the same period last year) as a percentage of sales declined by 121 bps due to a significant increase in finance costs and taxation.
Dairy-Based Products Segment
The segment reported revenue of Rs. 65.7 billion, reflecting a growth of 43% compared to the same period last year. Olper’s, our flagship brand, led the growth in the segment by strengthening its leadership position in the market through consistent brand and trade investments.
Our other brands, like Olper’s full-cream milk powder (FCMP), Olper’s Cream, and Tarang, have also gained a healthy market share despite competition from established players.
Frozen Desserts Segment
The segment reported revenue of Rs. 8.1 billion, reflecting a growth of 20% compared to the same period last year. This growth has been enabled by timely investments in occasions and innovations.
Financial Performance
The financial performance of the company for the nine months ended Sep 30, 2023, is summarized below:
| Nine months ended | Variation | ||
| Sep 30, 2023 | |||
| (Rs. in million) | 2023 | 2022 | |
| Net Sales | 73,819 | 52,827 | 40% |
| Operating Profit | 5,316 | 3,874 | 37% |
| % of sales | 7.2% | 7.3% | -13 bps |
| Profit / (Loss) after tax | 1,575 | 1,765 | |
| % of sales | 2.1% | 3.3% | -121 bps |
| Earnings / (Loss) per share (Rs.) | 2.06 | 2.30 | |
Future Outlook
As FrieslandCampina Engro Pakistan, we bring over 150 years of experience to the dairy landscape of Pakistan. Our purpose is to “transform the health and wellbeing of Pakistanis now and for generations to come, by nourishing them through unlocking the goodness of milk from grass to glass, as well as by enhancing the livelihood of farmers.”
The company expects to face headwinds on both the demand and supply sides due to the anticipated high levels of inflation, high-interest rates, and declining purchasing power of consumers. However, with an agile business model in place, the management is confident that it will be able to drive efficiencies across the value chain, build resilience, and continue to deliver growth by staying relevant to the consumer.
The business will continue to invest behind brand equity and expand its profit-accretive portfolio to leverage margins. Leveraging its global expertise and 150 years of heritage, the Company remains committed to the highest standards of hygiene, food safety, and sustainability and provides safe, affordable, and nourishing dairy products to millions of Pakistanis every day.
