Ayesha Mudassar

The Organic Meat Company Limited (TOMCL), a Pakistani meat processor, showed significant growth in its financial performance during the first quarter of the Fiscal Year 2025. The company reported a 290% increase in pre-tax profits and a 229% rise in post-tax profits compared to the same period last year, reports WealthPK.

For the first quarter of FY25, the company reported a pre-tax profit of Rs202.4 million and a post-tax profit of Rs170.6 million. This substantial profit growth is primarily attributed to controlled inflation, stable prices for raw materials and packaging, reduced selling expenses, and a decline in finance costs. The meat processor concluded 1QFY25 with a robust 46% year-on-year (YoY) increase in revenue, driven largely by higher export volumes to key markets including the UAE, Uzbekistan, and China. Despite the high cost of sales, the company successfully achieved a notable rise in gross profit by implementing effective cost-optimization strategies. TOMCL was incorporated as a private limited company in 2010.

The company specializes in the processing and sale of halal meat and allied products and has emerged as one of the leading exporters of red meat and meat by-products. As of June 30, 2024, TOMCL had 148.4 million outstanding shares, distributed across a diverse range of shareholders. Directors, CEOs, their spouses, and minor children hold the majority stake of 54.9% followed by the general public holding 31.59% of the total shares. The other local companies account for 10.2%, while the insurance companies hold 1.8%. Around 1.1% of the shares are held by modarabas & mutual funds and the remaining 0.35% by the banks, development finance institutions (DFIs), and non-banking financial companies (NBFCs).

Performance over the last six years (2019-2024)

TOMCL has consistently achieved a remarkable growth in both sales and net profit over the years, except in 2023. In 2019, the company's top line increased by 26% YoY, driven by significant improvements in both export and local sales. However, the cost of sales rose by 28% YoY, leading to a slight decline in gross profit margin to 15.8%, down from 17.2% the previous year. Despite this, a stunning increase in other income resulted in a 52% rise in net profit, which grew to Rs218 million. In 2020, TOMCL registered a topline growth of 31% YoY, fuelled by higher sales volume, improved pricing, and effective cost management. This led to an increase in the gross profit margin to 18.6%.

The company’s net profit also grew by 22% YoY, reaching Rs266 million. In 2021, the company achieved a 16% YoY increase in topline, supported by favorable pricing, currency fluctuations, and strong offal sales. The net profit rose by 14% YoY to Rs303 million, with a net profit margin of 7.7%. In 2022, TOMCL’s sales grew by 19% YoY. However, the high cost of sales resulted in a reduced gross profit margin of 13.1%, with gross profit falling by 6%. Nevertheless, the company’s bottom line improved by 36% YoY, driven by significant exchange gains and gains on biological assets. In 2023, TOMCL experienced a strong 37% YoY growth in topline.

The cost of sales increased to Rs5,512 million, driven by higher procurement and depreciation costs. A substantial rise in other income boosted the net profit, which grew by an impressive 76% YoY to Rs722 million, with a net profit margin of 11.3%. In 2024, TOMCL registered a staggering 85% YoY growth in its topline. This came on the back of improved demand from key international markets such as China, the UAE, and other Gulf countries. However, higher operating expenses and escalating finance costs led to a 31% drop in net profit, reaching Rs497 million with an NP margin of 4.2%.

Future Outlook

The company remains optimistic about increasing sales and leveraging its expanded production capacities. The successful entry into the Chinese market, along with the 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