FrieslandCampina Engro Pakistan Limited posts strong financial results in Q1, 2023

FrieslandCampina Engro Pakistan Limited (FCEPL) announced its financial results for Q1, 2023. The Company reported a revenue of PKR 22,651 million in the first quarter, showcasing 62% topline growth versus last year, driven by mix improvement, widening our distribution footprint, and volume growth in both, the Dairy-Based Products and the Frozen Desserts segments.

Despite inflation and rupee devaluation, the Company improved its gross margin and operating margin by 70 bps and 30 bps respectively, by driving cost efficiencies across the value chain. However, the Profit After Tax (Rs 990 million vs Rs 664 million same period last year), as a percentage of sales, declined by 40 bps due to increase in finance cost and taxation.

Dairy-Based Products Segment

With a growth of 66% versus Q1 2022, the segment reported a revenue of Rs. 21.2 billion. The flagship brand, Olper’s, led the growth in the segment along with strengthening its market leadership position through consistent brand building and trade activities.

Olper’s Cheese continued to grow in terms of volume and distribution each month. Building upon the momentum of last year, Olper’s Flavored Milk was launched in a new flavor of Mango. Other brands like Olper’s Full Cream Milk Powder (FCMP), Olper’s Cream, and Tarang also gained healthy market shares.

Frozen Desserts Segment

The segment reported a revenue of Rs. 1,441 million, reflecting a growth of 19% versus same period last year. This growth has been enabled by the segment’s planning, timely investment for opening the ice cream season, and the introduction of a new product, Shahi Mango Stick.

Financial Performance

The financial performance of the company for the three months ended March 31, 2023, is summarized below:

Three Months ended
March 31, 2023
(Rs. in million) 2023 2022
Net Sales 22,651 13,971 62%
Operating Profit 1,982 1,184 67%
% of sales 8.8% 8.5% +30 bps
Profit / (Loss) after tax 990 664
% of sales 4.4% 4.8% -40 bps
Earnings / (Loss) per share (Rs.) 1.29 0.87

 FCEPL Partnership with Engro Eximp FZE

In line with FrieslandCampina’s global purpose of nourishing by nature, FCEPL partnered with Engro Eximp FZE to expand its global footprint and enter new markets. The agreement will increase Pakistan’s dairy exports, bringing in much needed foreign exchange to the country while enriching farmers’ livelihoods.

Future Outlook

Rising inflation, foreign exchange constraints, currency devaluation, higher finance cost and import constraints continue to put pressures on the Company’s profitability. However, with an agile business model in place, the management is confident that it will be able to drive efficiencies and continue to deliver growth.

The business will continue to invest behind brand equity and expand its profit accretive portfolio to leverage margins. Leveraging its global expertise and 150 years heritage, FCEPL remains 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.

The Company’s Annual General Meeting was held on April 18, 2023 at the Royal Rodale in Karachi, where the shareholders and the Board of Directors discussed the Company’s performance in 2022.