August 05, 2022 (MLN): Fauji Foods Limited (FFL) is in the process of developing a synergy network for the entire Fauji group which would enable the company to generate revenue of Rs3-5 billion annually, said the management of the company in its corporate briefing.
To recall, the company is still in losses and suffered Rs754 million loss (LPS: Rs0.48) during 2QCY22, compared to the losses of Rs410mn incurred in 2QCY21 (LPS: Rs0.53), however, the company was able to increase the topline by 6.8% YoY.
It is prudent to note that PKR's fall against the USD led to inflationary pressure where the company had to increase its prices to fight inflated costs. The rise in energy/fuel prices also badly impacted the cost of sales.
The company is on a mission to do a turnaround and is trying by focusing more on revenue growth, higher margin products and recently brought in new management with specific goals, according to key takeaways covered by Darson Securities.
To counter the higher fuels cost company has taken multiple initiatives like biogas LOI signed, solar proposal completed and raw material cost optimization.
The company emphasized the fact that they are the only food company in Pakistan that has a very diverse and attractive portfolio mix which consists of butter, UHT Milk, Tea Creamer, Flavored Milk, Cream and cheese.
The company's Nupur UHT milk is the fastest growing brand within the dairy industry whereby it saw a growth of 51% on YoY in 2QCY22 compared to the SPLY. Also, the company mentioned that UHT milk now constituted 46% of the total product portfolio in 2QCY22 as compared to 28% SPLY.
Further, Dostea saw a reduction in the company’s product mix from 67% to 49% YoY during the said period.
The management noted that they have over the previous few years shifted from low-margin products such as creamer to high margins high value products such as butter and UHT milk.
However, the company does not plan on completely abandoning tea whitener as it generates volume for the company, it said.
Shedding some light on its partnerships with international brands, the company said that it has been able to secure some high-value international partnerships whereby it will supply 100% cheese to KFC and Mcdonald's. This will also allow them to tap into international supply chains and penetrate that market going forward.
The company stated that they have been emphasizing growing their distribution network to enhance volumes and have put a lot of effort and investment and money over the past 3-5 years to do so.
Recently, the company got a contract worth Rs1.5bn which should support margins in the future, the report added.