KARACHI: Friesland Campina Engro Pakistan Limited (FCEPL) announced its results to the Pakistan Stock Exchange on Tuesday.
The business continued its strong growth trajectory recording a 9th consecutive quarter of robust topline growth. During the year, the Company has reported a revenue of Rs 44.2 billion, registering a 14 percent growth versus last year, despite COVID-19 related lockdowns and closure of retail & leisure outlets.
The overall cost environment remained challenging, with high increases in the commodity costs in the last 12 months due to record food inflation and devaluation of the Pakistani Rupee. In particular, the business has witnessed a sharp hike in the cost of milk, which is a key input for the Company, in the last 3 months. However, the Company has already taken several initiatives to drive savings and efficiencies to manage inflation and drive financial performance, whilst a few more initiatives have subsequently been executed in Q1’21.
As a result, the Company achieved an 80-bps improvement in gross margins versus the FY 2019. The Company also continued to drive efficiencies in distribution and administrative expenses through multiple cost optimization initiatives. Accordingly, FCEPL registered a profit after tax of Rs 177 million versus a loss of Rs 955 million in the same period last year.
Led by its core brands Olpers and Tarang, the Dairy and Beverages segment registered a 17 percent growth versus the same period last year, reporting a revenue of Rs 40.5 billion. Both brands continue to win in the marketplace through strong brand and trade investments and have consolidated market share leadership in their respective categories. The business also continued expansion of its retail footprint by more than 11,000 outlets and explored newer channels and routes to market during the year.
The Company added to its portfolio by launching Olper’s Flavored Milk (fortified with added vitamins and minerals) and Tarang Tea Whitening Powder (at an affordable Rs. 10 price point) in the first half of the year. Other recent launches like Olper’s full cream milk powder (FCMP), Olper’s Creams, Olper’s Pro-Cal and Tarang Elaichi have gained a healthy market share in a short span of time despite strong competition from established players. The Company will continue to leverage FrieslandCampina’s global expertise to introduce new products and innovations as a key driver of future business growth.
The Ice Cream and Frozen Dessert segment was impacted by the closure of retail and leisure spots due to COVID-19, which coincided with the Ice Cream summer season.While the segment reported a revenue of Rs 3.6 billion versus Rs 3.9 billion in the same period last year, the business continued to create excitement by introducing 7 innovations, investing in brand building through the “summer blockbuster” campaign, and expansion of its trade universe. This paid strong dividends when the lockdowns were eased, and the segment subsequently witnessed improvement in sales.
Employee safety and wellbeing remained the Company’s No.1 priority. All safety communication and awareness sessions continued across the organization, while strict protocols were followed at the head office, field offices, milk collection centers, manufacturing sites and the farm at Nara. The Company also continued to support farmer livelihoods and ran awareness workshops to educate its farmer community about COVID-19.
The macro-economic environment remains challenging for both consumers and businesses amidst the COVID pandemic. While the Company foresees a tough operating environment in the future due to declining consumer purchasing power and higher costs it has preemptively taken several initiatives to drive savings and efficiencies to manage inflation and drive financial performance. The Company will also continue to leverage FrieslandCampina’s global expertise to introduce new products and innovations as a key driver of future business growth.—PR
Copyright Business Recorder, 2021
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