FrieslandCampina Engro Pakistan Limited (FCEPL) announced its financial results for the first half of the year, concluding on 30th June, 2024. Despite a challenging economic environment, the Company achieved 17% growth (revenue of PKR 55.0 billion, compared to PKR 47.0 billion in the same period last year) fueled by a favorable portfolio mix, effective market investments and distribution expansion.
The Company also witnessed a gross profit growth of 16% maintaining gross margins despite the inflationary pressures on commodities and energy prices. This performance demonstrates the Company’s resilience and ability to adapt to market conditions.
However, profit after tax declined by 6%, (PKR 1.26 billion compared to PKR 1.33 billion in the same period last year) due to a significant increase in interest rates.
DAIRY-BASED PRODUCTS SEGMENT
The segment reported revenue of Rs. 48.87 billion, reflecting a growth of 18% vs the same period last year.
Olper’s UHT continued to maintain its presence with the ‘Happy Subah’ campaign across key touchpoints, including TV, digital, and in-store. These consistent efforts across all relevant consumer touchpoints have strengthened Olper’s market and equity leadership in the category.
Value-added brands including Olper’s Cream, Olper’s Cheese, Dobala and Tarka continued to gain volume despite competition from established players.
FROZEN DESSERTS SEGMENT
Despite the challenging start of the year, the segment reported a revenue of 6.16 billion, a 13% growth vs the same period last year.
This was enabled due to continuous investment behind the brand through our newest campaign “Wow Bharay Deserts”, creating occasions consumption outside traditional festivities and exemplary in-store execution.
FINANCIAL PERFORMANCE
The financial performance of the company for the three months ended June 30, 2024, is summarized below:
| Half Year ended | Variation | ||
| (Rs. in million) | 2024 | 2023 | |
| Net Sales | 55,024 | 47,015 | 17% |
| Operating Profit | 4,003 | 3,873 | +3% |
| % of sales | 7.3% | 8.2% | -96 bps |
| Profit / (Loss) after tax | 1,253 | 1,326 | |
| % of sales | 2.3% | 2.8% | -54 bps |
| Earnings / (Loss) per share (Rs.) | 1.63 | 1.73 |
FUTURE OUTLOOK
(Sales tax on packaged milk – Effective July 1, 2024)
Through the Finance Act, 2024, the Government has imposed an 18% sales tax on the sale of packaged milk. This statutory change has resulted in a significant increase in the prices of packaged milk. As milk is a necessity, this price increase will add more financial strain on consumers who are already struggling with declining purchasing power.
Furthermore, this change has widened the gap between packaged milk and loose milk, the latter of which remains untaxed and unregulated. This disparity may drive consumers towards loose milk, which could have implications for public health and safety due to the lack of regulation.
The Company is actively engaging with relevant stakeholders through the Pakistan Dairy Association to communicate its position and inform them of the broader impact by highlighting how this tax will affect various Government priorities, including ensuring nutrition for all and expanding the documented economy.
FCEPL remains committed to maintaining its market position and ensuring the highest quality of products for its consumers. The Company will continue to respond to consumer needs through in-market initiatives and by offering relevant product propositions while driving efficiencies across the value chain and optimizing investments to enhance the overall financial health of the business, thereby generating greater value for our shareholders.
Leveraging its global expertise and 150 years of heritage, FCEPL remains committed to the highest standards to hygiene, food safety and sustainability and providing safe, affordable, and nourishing dairy products to millions of Pakistanis, every day.
