FFL's profit soars 10x to Rs234m

July 23, 2024 (MLN): Fauji Foods Limited (PSX: FFL) recorded a profit after tax of Rs234 million [EPS: Rs 0.09] in the second quarter of 2024, up a significant 950% compared to Rs22m [EPS: Rs 0.01] in the same period of last year.

In the first half of 2024, the company earned a profit of Rs337m as compared to a loss of Rs147m in SPLY.

The business has continued its growth momentum, recording a YTD revenue of Rs11.4 billion, up 14.6% YoY.

The three strategic pillars — Margin Accretive Growth, COGS reduction, and Capability — continued to drive topline as well as bottom-line, the company said in a stock filing on Monday.

Firstly, Nurpur UHT milk remains the fastest growing Milk brand in Pakistan. It recorded 50% revenue growth In H1 2024 compared to SPLY. The strategic acquisition of cereal business in February 2024 helped diversify the portfolio and allows the business to own the breakfast table.

Secondly, the commercial sustainability is reflected through the Improved structure of the P&L as gross margins increased from 14.4% Q2 2023 to 20% in Q2 2024.

This was driven by continued focus on cost efficiencies backed by continuous improvement in the Supply Chain.

As a result, FFL achieved Q2 2024 operating profit of Rs556m as against Rs184m in SPLY, an increase of 202%.

Thirdly, the company is on its journey to build world class capability across the organization. The First Management Trainee Program concluded this year and there are plans to broaden the scope in future.

Additionally, the digitization agenda is being driven across the businesses to harness insights for growth and efficiency.

With the commercial strategy delivering results, the EBIDTA, which has been on a growth path, was recorded at Rs1.09bn in H1 2024 from an EBITDA of Rs448m in SPLY, an increase of 144%.

Outlook

Looking ahead, the 18% GST on packaged milk is expected to affect the packaged milk industry, the company highlighted.

However, "investment in brands and distribution and high margin Cereals portfolio should continue to fuel the growth and delivery of improved financial performance," it said.

Pasta launch later in the year will further strengthen the culinary credentials of the portfolio extending it beyond the breakfast table, FFL said.

"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," it added.

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