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PREMA strives to shine beyond dairy

PREMA's profit plummets by 83% YoY in Q12024
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November 25, 2023 (MLN): The trailblazing titan of Pakistan's dairy sector, Prema At-Tahur (PSX: PREMA) is making significant strides to evolve into a comprehensive food company as its new Juice venture and Iced Tea successfully took the sweet spot among consumers, the management of the company informed during the Corporate Briefing Session held on Friday.

This strategic expansion beyond dairy products underlined the company’s efforts for diversification and market responsiveness which led the company to step into the ring as a full-fledged food contender.

Pertaining to the ongoing boycott of international brands, the management responded that so far, they are not receiving any demand-side pressure as the MNCs are offering discounts to keep their demand inelastic.

The management also mentioned that the footprint of the company has been expanded from Khyber to Karachi. In response to a query related to the company’s shelf life, the management stated that pasteurized milk has a shelf life of around 9-10 days in winter, while it only takes 24-36 hours to reach the product in Karachi.

In addition, the leading supermarket IMTIAZ also brings its products to Baluchistan.

With regards to the sales mix of the company, the management highlighted that it consists of 65% package milk and 35% value-added products. The company also sells raw milk at the rate of Rs150-155 per litre. The sales of raw milk increased from 5% to 20%.

Geographically, 60% of the company's revenue comes from Punjab, while the other regions collectively managed to bring 40% to the table.

Upon herd size, the management informed that it will not purchase any new cattle as it will be more focused on the indigenous growth of the existing herd size. However, based on the demand, the new herd will be added.

At present, the landed cost of one Australian cow is around Rs900,000.

The management also highlighted the challenges faced by the company during the outgoing year that include devastating floods coupled with increasing inflation, and escalating political tensions.

The company apprised that the company's financial performance for FY23 has displayed significant growth, with revenue surging by 49.05%.

This remarkable increase can be attributed to a combination of factors, including successful price adjustments, product portfolio expansion, and increased product quantity sales.

Additionally, gains on biological assets due to the devaluation of the local currency against the dollar have contributed to the substantial improvement in both gross and operating profit margins, which increased by 44.42% and 41.27%, respectively.

This, in turn, has translated into enhanced profitability, with net profit before tax and net profit after tax growing by 34.19% and 39.46%, respectively. The earnings per share (EPS) of Rs5.71 reflects the company's commitment to delivering value to its shareholders.

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Posted on: 2023-11-25T15:39:41+05:00