Ayesha Mudassar

The net sales of Rafhan Maize Products Company Limited (RMPL) declined by 1%, gross profit by 19%, and net profit by 30% in the first quarter (January-March) of the ongoing calendar year 2024, compared to the corresponding period of the last calendar year, WealthPk reports.

In 1QCY24, the company made net sales of Rs 17.4 billion and a gross profit of Rs 3.5 billion. The net profit stood at Rs 1.8 billion compared to Rs 2.5 billion in the corresponding period last year, resulting in the earnings per share (EPS) of Rs 195.77 versus Rs 290.73 in 1QCY23. Going by the unconsolidated results, the company's cost of sales rose by 5% year-on-year (YoY) to Rs 13.8 billion compared to Rs 13.1 billion in 1QCY23. On the expense side, the company observed a rise in distribution costs by 12% YoY and administrative costs by 22% YoY to clock in at Rs 217.2 million and Rs 397.6 million, respectively, during the review period. In addition, the company's finance cost increased by 167% YoY and stood at Rs 195.3 million compared to Rs 73.09 million in 1QCY23.

Pattern of Shareholding

As of December 31, 2023, the company has a total of 9.2 million shares outstanding, which are held by 927 shareholders. Associated companies, undertakings, and related parties hold 71% of the company's shares, followed by the local general public, which has a stake of 19.7%. Directors, CEOs, their spouses, and minor children own around 6.4% shares of RMPL, while Insurance companies account for 1.4%. The remaining shares are held by other categories of shareholders, each holding less than 1% shares.

Historical Performance (2018-23)

Rafhan Maize Products Company has experienced consistent growth in its topline since 2018. The company's bottom line also followed the upward growth trend except for a nosedive in 2022. The margins had been riding a downhill journey since 2018 but experienced an abrupt increase, reaching their highest level in 2020. In 2019, the company achieved the largest revenue growth of 19%, driven by robust local and export sales. However, this revenue growth could not be translated into improved margins due to the elevated cost of production. In 2020, RMPL faced a significant volumetric sales loss due to COVID-19-related lockdowns and cancellation of export orders. Although lower off-takes were somewhat offset by price increases, which only resulted in a 2% YoY topline growth, the bottom line grew by 12% YoY, with the NP margin rising to 17% compared to 15% in 2019. In 2021, the company's top line grew by 19% YoY, supported by both higher prices and increased sales volume. However, the high cost of production put the GP margin under pressure, which clocked in at 24% for the year. The NP margin declined to 15%, down from 17% in 2020.

In 2022, RMPL achieved a 38% YoY growth in sales, driven by a better sales mix, enhanced operational leverage, and innovative customer solutions. Despite this growth, the company's GP margin fell to a five-year low of 20% due to the high cost of sales. As a result, the bottom line decreased by 1% YoY, with the NP margin settling at 11% for the year. In 2023, the company's top line witnessed an 11% YoY rise, reaching Rs 65.4 billion. This growth was mainly driven by both export and local sales. The company's gross profit exhibited a YoY growth of 17% during the year. Consequently, RMPL improved its net profit by 12% to Rs 6.9 billion, resulting in earnings per share of Rs 748.43.

About the company

Rafhan Maize Products Company Limited started its operations in Pakistan as a corn refining industry in 1953. Since then, the company has expanded to become one of the largest agro-based industries in the country. RMPL specializes in producing a diverse range of food ingredients and industrial products, utilizing maize as its primary raw material.

Credit: INP-WealthPk