July 21, 2023 (MLN): Fauji Foods Limited (PSX: FFL) unveiled its profitability for the second quarter of 2023, wherein the profit after tax clocked in at 22.27 million (EPS: Rs0.01), compared to a loss of Rs754.3m (LPS: Rs0.48) in the same period last year (SPLY).
To note, FFL achieved its first-ever PAT positive (Rs22m) quarter in Q2 2023. In fact, it was 4th consecutive month in Green by the company.
Going by the results, the company's top line surged by 95.05% YoY to Rs4.67 billion as compared to Rs2.4bn in SPLY and With the first half revenue of Rs9.8 billion (+ 105% over SPLY) the business is all set to achieve the turnaround.
Nurpur continues to drive growth (+51% SPLY). The revamped route to market has fueled the increase in distribution (+ 14,000 outlets vs SPLY).
The strengthening of the brand has enabled Nurpur to navigate inflation through pricing. The institutional business forms the other key pillar of the growth strategy and it grew by 202% over SPLY.
The cost of sales fell by 71.92% YoY but was lesser than proportionate to sales decline, which improved the gross profit by 59.72x YoY to Rs569.93m in 2QCY23.
However, during the review period, other income rose by 43.77% YoY to stand at Rs56.87m in 2QCY23 as compared to Rs39.55m in SPLY.
On the expense side, the company observed a fall in Marketing and distribution expenses by 2.23% YoY and other expenses, at Rs157.43m and Rs1.69m respectively during the review period.
The company’s finance costs decreased by 89.30% YoY and stood at Rs35.59m as compared to Rs332.74m in 2QCY23, mainly due to higher interest rates.
On the tax front, the company paid a higher tax worth Rs60.57m against the Rs30.64m paid in the corresponding period of last year, depicting an increase of 97.71% YoY.
The commercial sustainability is reflected through the improved structure of the P&L as Gross Margins increased from 3.7% in 1HCY22 to 12.5% in 1HCY23.
This was driven by continued focus on cost efficiencies backed by twin sustainability projects of 1 MW solar and bio mass which went into production in Q1 and are expected to positively impact energy cost in 2023.
These initiatives along with price increases & other planned cost optimizations yielded an additional 8.8% gross margin.
As a result, FFL achieved an operating profit of Rs190m vs Rs708m loss in SPLY, an increase of Rs898m.
Moreover, with a solid turnaround strategy delivering results, the EBIDTA which has been on a growth path since Q4'22 surged to Rs448.4m in 1HCY23, a 197% growth over SPLY.
Looking ahead, the investment in brands and distribution infrastructure should continue to fuel the growth.
With the legacy debt burden now removed from the books, the growth in Margins and EBIDTA will help grow the business even faster whilst introducing new products.
The strategy of pivoting to the value-added portfolio will enable the business to cover the expected inflation through pricing & margin management.
| Unconsolidated (un-audited) Financial Results for Quarter ended 30 June, 2023 | |||
|---|---|---|---|
| June 23 | June 22 | % Change | |
| Sales | 4,668,668 | 2,393,603 | 95.05% |
| Cost of services | -4,098,740 | -2,384,060 | 71.92% |
| Gross Profit | 569,928 | 9,543 | 5872.44% |
| Marketing and distribution expenses | -349,240 | -341,636 | 2.23% |
| Administrative expenses | -157,427 | -98,378 | 60.02% |
| Other operating expense | -1,694 | 0 | – |
| Other Income | 56,866 | 39,554 | 43.77% |
| Finance cost | -35,591 | -332,738 | -89.30% |
| Operating profit | 82,841 | -723,668 | – |
| Taxation | -60,570 | -30,635 | 97.71% |
| Net profit for the period | 22,271 | -754,303 | – |
| Basic and diluted earnings/ (loss) per share | 0.01 | -0.48 | – |
Amount in PKR Thousands
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Posted on: 2023-07-21T15:58:00+05:00
