January 23, 2024 (MLN): Fauji Foods Limited (PSX: FFL) reported its profit and loss statement, wherein the profit after tax clocked in at Rs605.11 million [EPS: Rs0.26] compared to a loss of Rs2.17 billion [LPS: Rs1.37] recorded in the same period last year (SPLY).
The company has sustained profitability for the past 9 months, attributed to margin accretive growth, reduction in cost of goods sold, and capability development.
Nurpur continued to drive volume growth. The successful marketing campaign and Route to Market have ensured that Nurpur remains the fastest-growing UHT milk in Pakistan for the second successive year.
The strategic pivot to margin accretive portfolio continues to deliver results as the entire value portfolio grew by 98.5% in value.
Moreover, commercial sustainability is reflected through the improved structure of the P&L as Gross Margins increased from 7.8% to 15.1% in 2023 which was achieved through a focus on cost efficiencies backed by twin sustainability projects of 1 MW solar and biomass.
These projects along with optimized sourcing and improved efficiencies across the entire value chain helped counter the high inflation in 2023.
Going by the results, the company's top line recorded a significant increase of 60.39% YoY to Rs19.81bn as compared to Rs12.35bn in SPLY.
Similarly, the cost of sales rose by 47.84% to Rs16.83bn. As the increase in sales was greater than proportionate to the rise in cost to sell, the gross profit improved by 3.08x to Rs2.98bn in 2023.
On the expense side, the company observed a decrease in Marketing and distribution expenses by 1.11% YoY to clock in at Rs1.323bn during the review period.
On the other hand, a major increase was witnessed in Administrative expenses and other expenses to be reported at Rs722.33m and Rs577.94m in the calendar year 2023.
The company's earnings received support from a 19.6% YoY increase in other income, reaching Rs238.48m in 2023 compared to the Rs199.4m recorded in 2022.
Another contributing factor to FFL's profits was a significant decrease of 74.3% year-on-year in financing costs, which reduced to Rs323.79m during the review period.
The company reported a profit before tax of Rs273.25m, and with a tax rebate amounting to Rs331.86m, FFL achieved a net profit of Rs605.11m.
It is crucial to note that in 2022, the company faced a tax expense of Rs159.05m, exacerbating the net loss to Rs2.009bn.
Looking ahead, the investment in brands and distribution infrastructure should continue to fuel the growth.
To further complement the growth and as part of its “Margin Accretive Growth strategy” FFL received the board and shareholders’ authorizations in Q4 2023 to acquire Fauji Cereals and Fauji Infraavest (Pasta).
The compelling synergies across the three businesses will broaden the margin base and improve the P&L structure.
This allows FFL to own the breakfast table and extend its portfolio across multiple culinary occasions. The acquisitions, once completed (post statutory approvals), are expected to be EPS accretive.
"We are confident that FFL driven by its vision of “Unleashing Pakistan’s promise in everything we touch” will not only build a successful business but leave a mark on the broader national landscape for times to come," FFL stated.
| Financial Results for the year ended 30 December, 2023 | |||
|---|---|---|---|
| Dec 23 | Dec 22 | % Change | |
| Sales | 19,809,035,759 | 12,350,702,418 | 60.39% |
| Cost of sales | (16,826,717,108) | (11,382,005,892) | 47.84% |
| Gross Profit | 2,982,318,651 | 968,696,526 | 207.87% |
| Marketing and distribution expenses | (1,323,482,146) | (1,338,285,748) | -1.11% |
| Administrative expenses | (722,329,209) | (446,174,042) | 61.89% |
| Other Income | 238,475,021 | 199,400,052 | 19.60% |
| Other expenses | (577,938,872) | (133,328,146) | 333.47% |
| Finance cost | (323,792,596) | (1,259,766,520) | -74.30% |
| Profit before taxation | 273,250,849 | (2,009,457,878) | – |
| Taxation | 331,860,812 | (159,053) | – |
| Net profit for the period | 605,111,661 | (2,009,616,931) | – |
| Basic earnings/ (loss) per share | 0.26 | (1.37) | – |
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Posted on: 2024-01-23T12:31:37+05:00
