Ayesha Mudassar

The Organic Meat Company Limited (TOMCL), a Pakistani meat processor, witnessed a 33% drop in pre-tax profit and a 31% decline in post-tax profit during the last fiscal year 2023-24 compared to the earlier fiscal, reports WealthPK.

This decline was largely attributed to increased interest rates, rising raw material costs, and a sharp escalation in freight charges.

However, the meat processor concluded FY24 with an impressive 85% year-on-year growth in revenue, largely fuelled by higher export volumes to markets such as UAE, Uzbekistan and China. Despite rising raw materials costs, the company achieved a significant (85%) rise in gross profit (GP) as it employed various cost optimisation strategies.

Pattern of shareholding

As of June 30, 2024, TOMCL had 148.4 million outstanding shares, distributed across a diverse range of shareholders. Directors, the chief executive officer, their spouses, and minor children had the majority stake of 54.9% in the company followed by the general public holding 31.59% of the shares. Other local companies accounted for 10.2%, while insurance companies held 1.8%. Around 1.1% of TOMCL’s shares were held by modarabas & mutual funds and the remaining 0.35% by banks, development finance institutions, and non-banking financial companies.

Financial performance (2019-23)

TOMCL’s sales and net profit have been growing over the years. In 2019, TOMCL's top line grew by 26% YoY due to considerable improvement in both export and local sales. Cost of sales increased by 28% YoY, culminating in a GP margin of 15.8% in 2019 versus 17.2% in the previous year. Furthermore, the stunning growth in other income resulted in a 52% increase in the net profit, which grew to Rs218 million.

TOMCL registered a top-line growth of 31% YoY in 2020. High sales volume coupled with better pricing and cost management pushed the GP margin to 18.6%. In addition, the net profit grew by 22% YoY and stood at Rs266 million in 2020. Due to favourable pricing and currency dynamics as well as impressive offal sales, the company was able to post a 16% YoY top-line growth in 2021. The net profit increased by 14% YoY to Rs303 million with an NP margin of 7.7%. In 2022, the company's sales grew by 19% YoY. However, the high cost of sales resulted in a reduced GP margin of 13.1%. The company's bottom line grew by 36% YoY on the back of tremendous exchange gains as well as gains on biological assets. The year 2023 appears tremendous in terms of top-line growth, which was recorded at 37% YoY. The cost of sales rose to Rs5,512 million due to higher procurement and depreciation charges. The gigantic rise in other income gave vigorous impetus to TOMCL's net profit, which posted a stupendous 76% YoY growth of Rs722 million in 2023 with an NP margin of 11.3%.

About the company

TOMCL was incorporated as a private limited company in 2010. The company is engaged in the processing and sale of halal meat and allied products. It is also one of the leading exporters of red meat and meat by-products

Future outlook

The company remains optimistic about increasing sales and leveraging its expanded production capacities. Its successful entry into the Chinese market, along with increased output from recent capacity expansion, positions the company for sustained growth in the coming years. Moreover, the company will continue to diversify its product portfolio to meet evolving market demands and seize new opportunities in recently entered geographical markets.

Credit: INP-WealthPk