FrieslandCampina Engro Pakistan Limited announces Financial Results for FY 2022

FrieslandCampina Engro Pakistan Limited (FCEPL) announced its financial results for the year ended December 31, 2022. Building upon the growth trajectory, FCEPL delivered another record year with highest ever topline and operating profit of PKR 73.5 Billion and PKR 5.3 Billion respectively. The topline grew by 41% over last year driven by volume growth, mix improvement and expansion of the retail footprint despite aggressive competition and distribution challenges.

The Company witnessed gross profit growth of 37% while the gross margin declined by 50bps due to higher commodity prices, global geo-political environment, foreign exchange constraints, Rupee devaluation and floods. While the gross margin has declined, the operating margin improved by 60bps over last year due to initiatives such as cost rationalization and driving efficiencies across the value chain.

Profit After Tax grew by 37% despite higher interest rates and imposition of super tax.

School Milk Program

Keeping in view the Company’s purpose of nourishing Pakistan, the Company collaborated with University of Education and University of Veterinary & Animal Sciences to gauge the health benefits of daily milk consumption on children. For this purpose, School Milk Program (SMP) was conducted by providing milk to 8000+ children in 89 primary schools in Attock and Sheikhupura. The program generated encouraging research-based evidence that highlights the need to develop a policy for providing milk in schools at a national level to improve the status of nutrition in Pakistan.

Dairy and Beverages Segment

The segment reported a revenue of PKR 66.3 billion, reflecting a growth of 41% versus last year. Olper’s led the growth in the segment by strengthening its market leadership position through brand and trade investments. Olper’s UHT Milk, Olpers Cream, Dobala, Flavoured Milk and Tarang all posted a double­ digit growth

The segment deployed various physical availability initiatives along with capitalizing on category captaincy in the Modern Trade channel. Through targeted consumer promotions, investment in trade activations and consumer engagement, FCEPL’s retail footprint expanded by 4500+ outlets. The Company accelerated its profitable growth by driving its Value-Added Brands in the market.

Ice cream and Frozen Desserts Segment

he segment reported a revenue of Rs. 7.18 billion, reflecting a growth of 37% versus last year. The business invested in season ­opening activities and capitalized on all festivities through best-­in-­class service and expansion of the trade universe by inducting more assets in the market.

Financial Performance

The financial performance of the company for the year ended December 31, 2022, is summarized below:

Nine Months ended
September 30, 2022
(Rs. in million) 2022 2021
Net Sales 73,474 52,094 41%
Operating Profit 5,331 3,442 55%
% of sales 7.3% 6.6% 70 bps
Profit / (Loss) after tax 2,466 1,804
% of sales 3.4% 3.5% -10 bps
Earnings / (Loss) per share (Rs.) 3.22 2.35

Future Outlook

The business environment remains challenging amongst rising inflation, foreign exchange constraints, currency devaluation, higher finance cost and imposition of Super Tax. Moreover, rising natural disasters due to climate change and dynamic consumer needs may affect business’s ability to serve the consumers effectively. However, the Company will continue to remain agile and drive efficiencies across the value chain to deliver growth. The business will continue to invest in brand equity and expand its profit accretive portfolio to leverage margins.

Committed to Nourishing Pakistan, the Company will expand upon its partnership with the Pakistan Dairy Association (PDA) and the Government to educate the consumers on the potentially hazardous effects of loose milk, and positive features of safe, packaged milk. The Company will continue to scale up its industry-leading Dairy Development Program, which is designed to ensure inclusive growth and increased profitability for the dairy farmers, including women farmers and milk collection agents.

Leveraging its global expertise and 150 years heritage, FrieslandCampina Pakistan remains committed to the highest standards of hygiene, food safety and sustainability, and will continue to provide safe, affordable, and nourishing dairy products to millions of Pakistanis, every day.