FrieslandCampina Engro Pakistan Reports Huge Profits

FrieslandCampina Engro Pakistan Limited (FCEPL) announced its financial results for the nine months that ended on September 30, 2020.

FCEPL has registered a profit after tax of Rs. 321 million as compared with a loss of Rs. 809 million in the same period last year. Despite challenging times due to the COVID 19 pandemic, the company recorded an 8th consecutive quarter of robust topline growth.

The sales of the company grew by 13.62% to Rs. 32.37 billion as compared to Rs. 28.49 billion in the same period last year. With the increase in sales, the company’s cost also grew by 10.75% to Rs. 27.50 billion from Rs. 24.83 billion.

The overall cost environment remained challenging, with record inflationary levels leading to a high increase in commodity costs over the last 12 months and the sharp devaluation of the Pak Rupee.

However, the company achieved a 220 bps improvement in gross margins versus the same period last year through multiple initiatives including cost optimization and mix management. The improvement in margins has been diluted somewhat by the higher borrowing costs on account of high-interest rates in the first quarter.

Distribution and marketing expenses decreased to Rs. 2.77 billion as compared to Rs. 2.84 billion while administrative expenses also went down to Rs. 860 million from Rs. 891 million.

Other income of the company was reported at Rs. 366 million, up by 10% as compared to Rs. 332 million.

The company’s operating profit surged by 985% or 9.85 times to Rs. 1.48 billion as compared to Rs. 137 million. The finance cost of the company also increased by 19% to Rs. 1.03 billion from Rs. 866 million.

Earnings per share of the company was reported at Rs. 0.42 as compared to a loss per share of Rs. 1.05.

However, FCEPL’s share at the bourse was closed at Rs. 71.34, down by Rs. 5.76 or 7.47%, with a turnover of 750,000 shares on Friday.

Dairy and Beverages

Led by FCEPL’s largest brand Olper’s, the Dairy and Beverages segment registered a 16% growth versus the same period last year. The segment reported a revenue of Rs. 28.9 billion. The Company added to its portfolio by launching Olper’s Flavored Milk (fortified with added vitamins and minerals) and Tarang Tea Whitening Powder (at an affordable Rs. 10 price point) in the first half of the year.

Other recent launches like Olper’s full cream milk powder (FCMP), Olper’s Creams, Olper’s Pro-Cal and Tarang Elaichi have gained a healthy market share in a short span of time despite strong competition from established players.

Ice Cream

The Ice Cream segment was impacted by the closure of retail and leisure spots due to COVID-19, which coincided with the Ice Cream summer season. Consequently, the Ice cream and Frozen Dessert segment reported a revenue of Rs. 3.4 billion as compared with the revenue of Rs. 3.6 billion in the same period last year.


The macroeconomic environment remains challenging for both consumers and businesses amidst the COVID pandemic. The Company foresees a tougher operating environment in the future due to declining consumer purchasing power and higher costs.

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