Corporate result: Engro Foods reports earnings of Rs1.9b

Revenues show a drop of 5.7% to Rs23.3b for Jan-Jun

KARACHI: In line with the expectation of analysts, Engro Foods reported on Friday earnings of Rs1.9 billion for the first half of 2016, which is nominally less than the net profit for the comparable period of 2015.

The company’s revenues recorded a year-on-year drop of 5.7% to Rs23.3 billion for January to June. The company did not announce any cash dividend.

According to Topline Securities, competition from new entrants like CupShup by Dalda and Dostea by Fauji Foods in the tea-whitener category hurt the market share of Tarang, which is the largest selling brand of Engro Foods.

Financial charges of Engro Foods in the Apr-Jun quarter alone dropped by 59% to Rs111 million. This should be attributed to a multi-decade low benchmark interest rate of 5.75%.

However, the effective tax rate increased 117% in the second quarter mainly on the back of one-time super tax expense, it said.

The drop in revenues on a quarterly basis was 1.3% while the net profit went down 23%.

Profit margins recorded a seasonal decline in Apr-Jun due to the lean season (starting from April and lasting through most part of summer), which increased the farm gate prices of milk, it added.

“We flag volatility in international milk powder prices, decline in consumption due to a poor law and order situation and increase in competition from new entrants in the tea-whitener category as key risks for Engro Foods,” it said.

Published in The Express Tribune, July 30^th, 2016.

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