Friesland Campina Engro Pakistan Limited (FCEPL) witnessed a fall of 69.9% in profitability, clocking in at Rs249.1 million during the third quarter ending September 30, 2023, as compared to a profit-after-tax (PAT) of Rs826.9 million in the corresponding period of CY22, reports WealthPK. The cost of sales surged by 28%, reducing the gross profit by 10.6% to Rs3.4 billion during the period under review. Similarly, the profit-before-tax (PBT) also plummeted by 61.3% during the quarter, reaching Rs472 million. The lower profit was mainly due to challenging and adverse economic conditions that included depletion of the foreign exchange reserves, depreciation of local currency, a steep increase in the interest rate, high inflation, and discriminatory tax policies. The net revenue posted a reasonable year-on-year growth of 21.5% to clock in at Rs26.8 billion. The growth in sales can be attributed to increased consumer demand and the company’s strategic marketing initiatives. The earnings per share (EPS) for the year stood at Rs0.33, representing a 69.4% decline compared to the same period last year. The declining EPS suggests a decrease in the company’s earnings available to the shareholders per share. Nine-month performance The company’s financial performance for the nine months ending September 30, 2023, reflects growth in various key financial metrics.

The revenue grew by 39.7%, whereas the gross and before-tax profits rose by 23.4% and 4.9%, respectively during 9MCY23 as compared to the corresponding period of the previous calendar year. The company generated a revenue of Rs73.8 billion during 9MCY23 compared to Rs52.8 billion in the same period last year, fuelled by both volume and value growth. However, the profit-after-tax and EPS declined during 9MCY23 as compared to 9MCY22. The company and its operations Friesland Campina Engro Pakistan Limited is a public listed company incorporated under the Companies Ordinance, 1984 (now the Companies Act 2017). It is a subsidiary of Friesland Campina Pakistan Holdings B.V. (the holding company), which is a subsidiary of Zuivelcoöperatie Friesland Campina UA (the ultimate parent company). The principal activity of the company is to manufacture, process, and sell dairy-based products and frozen desserts. The company also owns and operates a dairy farm. Dairy farmers are the backbone of the company’s supply chain. Future Outlook The coming months present unprecedented challenges and uncertainties with continuing political instability, exchange rate volatility, and high inflation. Given the unpredictable economic environment, the company's management is confident of driving efficiencies across the value chain and building resilience.

Credit: Independent News Pakistan (INP)