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National Foods (KSE: NATF), one of the forerunners of packaged food additives in Pakistan announced pleasant results for 1QFY14.
Last few months have mostly been considered as a sluggish time for the FMCG segment, in spite of the eventful time of the year for the food manufacturers i.e. Ramazan, taking place in the start of the quarter. National Foods displayed a significant 38 percent year-on-year rise in net profit on account of the firms rising sales and improved margins.
Each division, especially the recipe masala segment saw good growth in the 1QFY14. The demand for National Foods products increased both locally and internationally with the year-on-year growth being 23 percent and 20 percent, respectively.
NATF consumer base overseas is growing as they made way into the international market, especially Canada, by means of appointment of new distributors. While local sales grew due to their continued Nationals Converter Activity program, an initiative to enhance consumer interaction at the market level.
Regardless of an upsurge in price of inputs caused by inflationary pressures and the intensification in energy crisis, NATF due to its decent product portfolio and sturdy brands exhibited resilience and revealed an improved gross margin.
On the operational aspect, even with the growth in the administrative costs of 67 percent year-on-year, efficiency enhanced due to the company's incessant efforts to control sales and distribution incidentals and rationalising the advertising expenses that account for a considerable share of NATF net sales.
Moving forward, NATF endeavours towards diversification of their product portfolio are expected to abet it to perform well in the future.


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National Foods Limited
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Rs (000) 1QFY14 1QFY13 chg
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Net Sales 3,041,091 2,475,402 23%
Cost of sales 1,883,947 1,540,131 22%
Gross profit 1,157,144 935,271 24%
Distribution expenses 557,873 506,024 10%
Administrative expenses 132,996 79,663 67%
Profit for the period 299,424 217,593 38%
EPS (Rs) 5.78 4.20
Gross profit margin 38.1% 37.8%
Operating profit margin 15.3% 14.1%
Net profit margin 9.8% 8.8%
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Source: KSE notice

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