Financial Results – Half year, June 2021

Business Performance

FrieslandCampina Engro Pakistan Limited (FCEPL) announced its financial results for the half year ended June 30, 2021. The Company reported revenue of Rs 24.6 billion registering 22% growth over last year, on the back of strengthened distribution and increased availability of products, in addition to ongoing investment in brands. The consecutive quarter-on-quarter growth reflects a wider footprint of our portfolio of brands across Pakistan.

The business climate remained challenging with record inflation leading to a steep increase in commodity prices. The Company has managed to offset these spikes and improve Gross Margin by 350bps over last year through several innovation-related and saving initiatives spanning the entire value chain. The resultant profit after tax shows an improvement of 430bps versus last year, primarily due to a reduction in finance cost of 47%, as a result of reduced rates and effective management of working capital.

Dairy and Beverages

With restrictions and lockdowns gradually lifting, the segment reported a revenue of Rs. 21.4 billion, growing 17.6% compared to the same period last year. The improvement was spearheaded by Olper’s, which has grown consistently due to strong brand and trade investments. The segment continues to build and invest in newer channels to serve consumers effectively.  

With a focus on improving accessibility, and sustainability, the Olpers Economy Pouch was launched at Rs 50 price point  in Pakistan. This innovative multi-serve pack offers a strong value proposition for enables consumers to experience the natural goodness of milk in a safe, healthy and affordable manner. Other recent launches include, Olper’s Flavored Milk, Olper’s Full Cream Milk Powder (FCMP), Olper’s Cream, Olper’s Pro-Cal, Tarang Tea Whitening Powder (TWP) and Tarang Elachi, all of which have gained a healthy market share in a short span of time despite strong competition from established players. The Company will continue to leverage FrieslandCampina’s global expertise to introduce new products and innovations as a key driver for future business growth.

Ice Cream and Frozen Desserts

Preemptive out-of-home activities and an early start to the summer have led to our highest-ever volumes in the first half of the year, with growth of 63.6% versus last year and revenue of Rs. 3,148 million versus a revenue of Rs. 1,924 million in the same period last year. The business segment created excitement by launching 4 new products, and its buzz-generating “summer blockbuster” and “wow bhara bite” campaigns. Increased usage of e-commerce continues to improve the breadth and depth of our customer base.

Financial Performance

The financial performance of the company for the half year ended June 30, 2021 is summarized below:

Half year
June 30, 2021
(Rs. in million) 2021 2020
Net Sales 24,590 20,151 22%
Operating Profit 2,389 1,178 103%
% of sales 9.7% 5.8% 390 bps
Profit / (Loss) after tax 1,414 293
% of sales 5.8% 1.5% 430 bps
Earnings / (Loss) per share (Rs.) 1.84 0.38

Future Outlook

The Dairy Industry welcomes the Government’s initiative of restoring Zero Rating on Milk through recent Finance Act. At FrieslandCampina Engro Pakistan Limited, our purpose is to transform the health and well-being of Pakistanis now and for generations to come. This change enables us to better serve our purpose by developing new products, improving accessibility and availability, and investing in public awareness campaigns – in partnership with the Pakistan Dairy Association and the Government of Pakistan, to accelerate the conversion to safe, hygienic, nutritious packaged milk, and thereby improve public health.

This support from Government also enables us to contribute more towards our Dairy Development Program, which is designed to ensure inclusive growth of our nationwide dairy farmer network, by providing knowledge and training in yield management, best farming and veterinary practices, as well as support in capital investment which cumulatively results in a better livelihoods for our farmers; a core component of our corporate purpose.

With higher yields from farmers and increased acceleration in conversion to packaged milk, the company foresees long term and sustainable growth both in terms of capital expansion and value creation for our shareholders.

The Company remains committed to the highest standards of hygiene, food safety and sustainability, and will continue to leverage its global expertise and 150 years of experience to provide safe, affordable, and nourishing dairy products to millions of Pakistanis, every day.

About FrieslandCampina Engro Pakistan Limited

FrieslandCampina Engro Pakistan Limited (previously known as Engro Foods Ltd) is a Pakistani dairy company which is a subsidiary of the Dutch multinational corporative FrieslandCampina. The company operates two processing plants in Sukkur and Sahiwal, with its HO based in Karachi, Pakistan. Its portfolio includes well-known brands like Olper’s, Omoré, and Tarang.

FrieslandCampina Engro Pakistan brings over 150 years of experience to the dairy landscape of Pakistan with the purpose of “transforming 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.”

Through its strong foothold in the local market, FCEPL is driven towards creating sustainable supply chains, which include 116,000+ farmers and milk suppliers, a network of over 1,400 milk collection centers, two plants, a dairy farm in Nara, and an extensive distribution network with a national footprint.

The Company takes great pride in its Dairy Development Programs for farmers. Designed to ensure inclusive growth and increased prosperity, it assists thousands of farmers by improving their farm management and milk quality, through regular training in good farming practices, as well as financial aid in capital investment.

FrieslandCampina Engro Pakistan Ltd is committed to the highest standards of hygiene, food safety and sustainability and providing safe, affordable, and nourishing dairy products to millions of Pakistanis, every day.