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FrieslandCampina Engro Pakistan Turns to Profit in 2020

FrieslandCampina Engro Pakistan Limited (FCEPL) announced its financial results for the year ended December 31, 2020.

FCEPL has reported a profit after tax of Rs. 176.92 million as compared with a loss of Rs. 954.86 million in the same period last year. Despite challenging times due to the COVID-19 pandemic, the company recorded a 9th consecutive quarter of robust topline growth.

The sales of the company grew by 14.5 percent to Rs. 44.15 billion compared to Rs. 38.56 billion in the same period last year despite COVID-19 related lockdowns and closure of retail and leisure outlets. With the increase in sales, the company’s cost also grew by 13.42 percent to Rs. 38.20 billion from Rs. 33.68 billion.

The overall cost environment remained challenging, with high increases in the commodity costs in the last 12 months due to record food inflation and devaluation of the Pakistani Rupee.

“In particular, the business has witnessed a sharp hike in the cost of milk, which is a key input for the company, in the last 3 months. However, the company has already taken several initiatives to drive savings and efficiencies to manage inflation and drive financial performance, whilst a few more initiatives have subsequently been executed in Q1’21,” said a statement issued by the company.

As a result, the company achieved an 80-bps improvement in gross margins versus the FY 2019. The company also continued to drive efficiencies in distribution and administrative expenses through multiple cost optimization initiatives.


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Dairy and Beverages segment

Led by its core brands, Olper’s and Tarang, the Dairy and Beverages segment registered a 17 percent growth versus the same period last year, reporting revenue of Rs. 40.5 billion.

“Both brands continue to win in the marketplace through strong brand and trade investments and have consolidated market share leadership in their respective categories,” said the company.

The business also continued the expansion of its retail footprint by more than 11,000 outlets and explored newer channels and routes to market during the year.

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 period despite strong competition from established players.


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Ice Cream and Frozen Dessert

The Ice Cream and Frozen Dessert segment were impacted by the closure of retail and leisure spots due to COVID-19, which coincided with the Ice Cream summer season. While the segment reported a revenue of Rs. 3.6 billion versus Rs. 3.9 billion in the same period last year.

Distribution and marketing expenses decreased to Rs. 3.66 billion as compared to Rs. 3.67 billion while administrative expenses also went down to Rs. 1.15 billion from Rs. 1.24 billion.

Other income of the company was reported at Rs. 546 million, up by 32.52 percent as compared to Rs. 412 million.

The company’s operating profit surged by 1140 percent or 11.4 times to Rs. 1.50 billion as compared to Rs. 121 million. The finance cost of the company was reported at Rs. 1.23 billion compared to Rs. 1.22 billion.

Earnings per share of the company were reported at Rs. 0.23 compared to a loss per share of Rs. 1.25.

At the time of filing this report, FCEPL’s shares at the bourse were trading at Rs. 80.46, down by Rs. 6.52 or 7.50 percent, with a turnover of 831,500 shares on Tuesday.

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