Financial Results – Quarter End, March 2021

Business Performance

FrieslandCampina Engro Pakistan Limited (FCEPL) announced its financial results on April 20th, 2021. The Company reported Q1 revenue of Rs. 11.6 billion, registering 18% growth year-over-year, illustrating strong and sustained topline growth.

Facing sharp increases in commodity costs due to inflation, and Covid-19 related challenges, the Company took initiatives to improve cost-efficiencies and accelerate financial performance. As a result, the Gross Margins improved by 480bps compared to last year.

The business also continued to drive efficiencies in distribution and administrative expenses through multiple savings initiatives. Consequently, the Company registered a profit after tax of Rs 547 million versus a loss of Rs 131 million in the same period last year.

Led by its largest brand, Olper’s, the Dairy and Beverages segment reported revenues of Rs. 10.7 billion, registering a 15% growth on a YOY basis. The Company added to its portfolio by launching the Olper’s UHT Economy Pouch at a Rs 50 price point – the first of its kind. Other recent launches such as, Olper’s Flavored Milk, Olper’s Cream and Tarang Tea Whitening Powder (TWP) also contributed to growth by gaining healthy market share in a short span of time, despite strong competition.

The Ice Cream and Frozen Dessert segment reported a stellar 84% growth in revenue, increasing to Rs. 903 million versus Rs. 491 million for the same period last year.

By preempting an early start to the summer season, the division capitalized on its recent retail footprint expansion, created excitement by introducing 2 new innovations, and launched its “summer blockbuster” campaign to record its highest ever volumes in the January-to-March period.

Employee safety and well-being remained the Company’s No.1 priority. Ramping up its support efforts during Covid-19, the Company initiated an optional vaccination drive for all permanent employees, and their immediate family members (18 and above). Safety communication and awareness sessions continued across the entire supply chain, and strict protocols continue to be followed at the head office, field offices, milk collection centres, manufacturing sites and the farm at Nara.

Financial Performance

The financial performance of the company for the quarter ended March 31, 2021 is summarized below:

Quarter ended
March 31, 2021
(Rs. in million) 2021 2020
Net Sales 11,577 9,806 18%
Operating Profit 964 197 390%
% of sales 8.3% 2.0% 632 bps
Profit / (Loss) after tax 547 -131
% of sales 4.7% -1.3% 606 bps
Earnings / (Loss) per share (Rs.) 0.71 -0.17

Future Outlook

The macroeconomic environment continues to remain arduous for businesses and consumers alike, amidst the resurgence of COVID-19 cases in the third wave. The Company foresees a challenging business environment in the future due to declining consumer purchasing power and higher input costs. However, several initiatives are being taken to drive efficiencies, manage inflation, and optimize financial performance.

The Company’s priority remains to ensure a consistent supply of nutritious and safe products to its consumers, while driving business growth and improving conversion from unsafe loose milk to packaged milk by:

  • Championing consumer trust by delivering on our promise of Nourishing Pakistan.
  • Strengthening brand equity.
  • Continuing to leverage FrieslandCampina’s global expertise to introduce new products and innovations as a key driver of future business growth
  • Supporting the Pakistan Dairy Association (PDA) in educating consumers about the benefits of packaged milk, and the hazards of loose milk
  • Interfacing with the Government to provide support in creating mass awareness around nutrition and safe milk consumption, and in developing favourable fiscal policies for the dairy sector.
  • Working with Regulatory Authorities to harmonize the Federal and Provincial food laws and draft legislation on minimum pasteurization.

FCEPL’s purpose is “to transform the health and well-being 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 remains committed to the highest standards of hygiene, food safety and sustainability and providing safe, and nourishing dairy products to millions of Pakistanis, every day.

* * The Company’s Annual General Meeting was also held on April 20, 2021. In line with COVID19 requirements, the meeting was conducted via Zoom. Shareholders and the Board of Directors discussed the Company’s performance in 2020 and the CEO gave a short presentation on the Company’s performance.