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FFL endures loss of Rs2.16bn in CY22

FFL expands portfolio with acquisition of Fauji Infraavest
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January 27, 2023 (MLN): Fauji Foods Limited (PSX: FFL) has wrapped the CY22 in turbulence as the loss after tax of the company has elevated by 73% YoY to stand at Rs2.16 billion, compared to the losses recorded in CY21.

As per the financial statement revealed by the company on Friday, FFL achieved 44% growth in net revenue for the year 2022. This was driven by a 66% increase in Nurpur UHT milk volume, doubling the institutional sales and distribution increase of 57%.

This growth is attributed to the increase in marketing investment, distribution automation, and leveraging group synergies.

Inflationary pressure on the back of devaluation, floods, and macroeconomic uncertainty resulted in a 50% increase in raw milk prices and other major cost components.

That in turn, eroded the margins by circa 7% in Q2. Management responded by a) increasing prices and b) deploying cost-saving initiatives.

Consequently, the margins were fully restored in Q4. The volume growth, complimented by pricing and efficiency initiatives, delivered a Q4 EBITDA of Rs383mn (Rs77mn excluding one-time sales tax reversal), a 262% growth over Q3.

The interest cost of Rs1.26 bn constitutes 58% of the loss. The sponsors have committed to injecting equity of Rs11.71bn via Other than Rights Share.

This will eliminate the debt overhang and rid the business of the interest cost that is a drag on the company’s performance.

Looking ahead the management expects the growth momentum to carry on in 2023.

Key efficiency initiatives of cheaper energy mix (solar and biofuel), localized packaging, and optimized processes are expected to yield savings of approximately Rs1bn in 2023.

 The Q1 equity injection shall eliminate the debt of Rs8bn, removing the burden of interest cost on the business.

Financial Results for the Half year ended on December  31, 2022 ('000 Rupees)

 

Dec-22

Dec-22

% Change

Revenue from contracts with customers – net

12,350,702,418

8,586,396,344

43.84

Cost of revenue

(11,380,034,184)

(7,663,661,981)

48.49

Gross profit

970,668,234

922,734,363

5.19

Marketing and distribution expenses

(1,338,285,748)

(1,019,059,263)

31.33

Administrative expenses

(448,145,750)

(360,822,937)

24.20

Loss from operations

(815,763,264)

(457,147,837)

78.45

 

199,400,052

76,233,076

161.57

Other expenses

(133,328,146)

(523,991)

25344.74

Finance cost

(1,259,766,520)

(1,155,050,524)

9.07

Loss before taxation

(2,009,457,878)

(1,536,489,276)

30.78

Income tax expense

(159,052,640)

283,547,018

-156.09

Loss for the year

(2,168,510,518)

(1,252,942,258)

73.07

Earnings per share – basic and diluted (Rupees)

(1.37)

(0.79)

73.42

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Posted on: 2023-01-27T16:04:29+05:00