January 25, 2022 (MLN): Fauji Foods Limited (FFL) managed to end the year 2021 by effectively reducing the overall losses as the company’s Loss after Taxation (LAT) has shrunk by almost 59 percent to clock in at Rs1.25 billion (LPS: Rs1.60), compared to the losses incurred in CY20 Rs3bn (LPS: Rs3.92), as per the financial statement revealed by the company on Tuesday.
This decline in net losses is mainly owing to the significant drop in finance costs. The focus of the management is to grow the company’s topline and to achieve that, FFL is actively working on expanding its distribution network.
As per management, the company has strengthened its retail network in northern regions and it is also penetrating the southern market by enhancing its footprint in Karachi.
Resultantly, the company managed to uplift its topline by 16.5% to Rs8.59bn in 2021 on the back of an improved distribution network, efficient procurement and process advancement.
Resultantly, the company saw a major turnaround in gross profit worth Rs921 million during the review period as compared to the gross loss of Rs62mn in 2020.
According to Muhammad Shahroz, Equity Research Analyst at Insight Securities, given the improved outlook of sales volume, turn around in gross profit, restructuring of debt, the borrowing price differential between packaged and loose milk and recent change in taxation regime, it is expected that company’s bottom-line to turn positive in CY23.
With regards to the major expenses, the company observed a 19.3% expansion in terms of marketing and distribution expenses to clocked in at Rs1bn in 2021. On the other hand, administrative expenses relatively remained flat at Rs359mn during the period under review.
Meanwhile, the finance cost of the company has tumbled by 34% on the back of the interest rate cut by the State Bank of Pakistan in order to provide a smooth business environment in the wake of the Covid-19 pandemic.
On the income front, the head of other income dropped by 22.8% during the period to lock in at Rs76.23mn, while the company observed a major decline in its other expenses by 99% during the period under review.
Profit and Loss Account for the year ended December 31, 2021 (Rs) | |||
|---|---|---|---|
Dec-21 | Dec-20 | % Change | |
Sales-net | 8,586,396,344 | 7,373,162,067 | 16.5% |
Cost of Sales | (7,665,360,235) | (7,310,900,013) | 4.8% |
Gross Loss | 921,036,109 | 62,262,054 | 1379.3% |
Marketing and distribution expenses | (1,019,059,263) | (854,143,010) | 19.3% |
Administrative expenses | (359,124,683) | (355,432,212) | 1.0% |
Loss from operations | (457,147,837) | (1,147,313,168) | -60.2% |
Other income | 76,233,076 | 98,704,064 | -22.8% |
Other expenses | (523,991) | (242,918,870) | -99.8% |
Finance cost | (1,155,050,524) | (1,752,267,407) | -34.1% |
Loss before taxation | (1,536,489,276) | (3,043,795,381) | -49.5% |
Taxation (current) | (122,041,623) | (14,316,124) | |
Deferred | 405,588,641 | – | |
Loss for the period | (1,252,942,258) | (3,058,111,505) | -59.0% |
Loss per share – basic and diluted (in Rupees) | (1.60) | (3.92) | -59.2% |
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