Rounding off the year in style, Engro Foods has posted its highest ever quarterly earnings to date; taking the year-end tally to a hefty Rs 2.6 billion in CY12, coming off the back of a nearly 35 percent increase in revenues year-on-year.
While the 4QCY12 growth in the top line has been largely accounted by the firms dairy products, which saw an across the board price hike back in September 2012, the year on the whole saw the firms top line witness incremental growth- with sales having climbed by a significant 47 percent year on year by 1HCY12.
The year saw the firms revenue stream benefit from the much hyped launch of Omung Lassi, while the firms dairy creamer Tarang remained a consumer favourite throughout the year. Overall, dairy products remained the firms strongest offering, with a hefty proportion of the high sales coming on account of increased market share in the Ambient UHT milk segment- of which the firm had managed to capture nearly 51 percent market share by the nine-month mark.
On the whole, the firms Dairy & Beverages segment recorded revenue of Rs 37 billion and profit after tax of Rs 447 million during CY12. Meanwhile the ice cream segment registered a volumetric decline of three percent over the year largely on account of the worsening energy crisis in the country, which negatively impacted the firms cold chain infrastructure.
The year on the whole was largely characterized by the aforementioned uptick in sales coupled with higher prices, which filtered down into improved margins for the firm. The gross margins improving by nearly 3.5 percentage points year-on year, while quarter-on-quarter they improved by some 90 bps, despite the fact that the firms ice cream sales were down in lieu of the seasonal let-up.
Following a year that has been kinder than ever to food producers- most of whom saw double digit growth figures throughout CY12- Engro Foods saw its operating profit double up over last year with EPS having trebled over last year, having climbed to Rs 3.4 at the year-end mark.
On the one hand, while the firms selling and administrative expenses during the year hiked up quite predictably along inflationary lines -going up by 26 and 46 percent respectively - the finance costs slipped down significantly, going down by 14 percent year on year on account of net debt retirement during the year.
Easily the best performing stock in the food sector and one of the overall outperformers during CY12, Engro Foods has gained an exceptional 325 percent since the start of the year, providing an above average return of 293 percent against the 49 percent return posted by benchmark KSE 100 index since its listing in 2011.
Hence Engro Foods is all geared up to go from strength to strength in CY13, having largely lived up to its name as one of the high growth companies in the country. Moreover, it is likely to remain a firm favourite with the investors in CY13 on account of the long term growth prospects coupled with the firms propensity to chalk out exceptionally innovative branding.
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ENGRO FOODS LIMITED
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Rs (mn) CY11 CY12 chg
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Sales 29,859 40,169 35%
Cost of sales 23,230 29,848 28%
Gross profit 6,629 10,321 56%
Gross profit margin 22.2% 25.7%
Distribution and other selling expense 3,716 4,709 27%
Administrative expenses 505 740 47%
Finance cost 1,049 902 -14%
Operating Profit 2,412 4,823 100%
NPAT 891 2,595 191%
Earning per share (Rs) 1.22 3.4
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Source: KSE notice.
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