Engro Foods, one of the fast emerging food companies in Pakistan, has shown phenomenal top-line growth. The latest financial result released for CY11 shows a 43 percent increase in net sales compared to CY10. This converted into an EPS of Rs.1.22 in CY11 compared to Re.0.31 last year. The increase was backed by the spike in the dairy and juices segment. The food giant expanded its product line by introducing Dairy Omung for the budget conscious segment. Olpers product line was also extended by the launch of two new flavours Rose and Badam Zafran. Tarang, the highest revenue earner for the Company continued supporting the top line of the Company. The Company also expanded its customer base by geographical diversification, as in the first quarter of this year; it launched its ice cream in Karachi. The increase in product lines and geographical expansion enabled the Company to beat its last years sales by the first nine months of CY11. It looks like the huge investments made in the infrastructure development over the past couple of years are now paying off. This effect can be seen by the increase in the operating profit which rose to 2.6x from Rs.929 million in CY10 to Rs.2.4 billion in CY11. Mainly this increase is backed by the proportionate decrease in distribution and marketing expenses, which slid from 14 percent of sales CY10 to 12.45 percent in CY11. Also adding to the increase, was the other operating income which grew by a massive 294 percent. An industry analyst while talking to BR Research said that the increase in other operating income is owed to the income from the Engros new rice processing plant. The pre-tax profits were slightly trimmed down by the finance costs. The Company had increased its borrowing to meet the finance needs that had surged due to expansion. Overall, the outlook for the Company looks sound as the newly launched Dairy Omung has good prospects and it is expected to become the cash cow of Engro Foods. Its highly competitively pricing is its USP as its price is roughly equal to the price of loose milk. The Companys continuous effort to diversify products and markets promises a bright future.
==================================================== Engro Foods ==================================================== Rs (mn) CY11 CY10 chg ==================================================== Net sales 29859 20944 43% Cost of sales 23230 16552 40% Gross profit 6628 4392 51% Gross profit margin 22% 21% 6% Other operating income 213 54 294% Finance cost (1049) (659) 59% PAT 890 175 409% EPS (Rs) 1.22 0.31 294% ====================================================
Source: KSE notice
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