Engro Foods’ 2015 profit up 256%

Amounts to Rs3.2b; fourth-quarter performance below expectations

KARACHI:

Despite a ‘weak performance’ in the last quarter, Engro Foods more than doubled its net profit, which amounted to over Rs3 billion, in financial year ending December 31, 2015, revealed a notice sent to the Pakistan Stock Exchange on Wednesday.

A subsidiary of Engro Corp. - Pakistan’s largest private-sector conglomerate - the local foods giant reported an after-tax profit of Rs3.2 billion or Rs4.13 per share during the year under review, up by a staggering 256% compared to Rs888 million or Rs1.16 per share it earned in 2014. However, its fourth-quarter result was below street consensus, say analysts.

Its revenue during 2015 improved significantly on the back of higher volumetric flows in Olper’s. The company’s reported Rs50 billion in net sales during 2015, up 17% compared to Rs42.6 billion it grossed in 2014.

“They [Engro Foods] had a good year overall, but results of the fourth quarter were below market expectations,” Taurus Securities’ Head of Research Zeeshan Afzal said.

Following the results announcement, the stock came under pressure and depreciated by Rs1.3 per share or 0.9% by close of business on Wednesday.

Opening at Rs146.15 per share, the stock reached a high of Rs149.75 during intra-day session and settled at Rs144.86 per share with more than 1 million shares changing hands - its highest turnover for the month so far.



Taurus Securities attributed the rise in the company’s earnings to an increase in Olper’s market share and recovery in sales of Dairy Omung, adding that the price increase also made a contribution to the bottom line.

The company’s gross margins improved by 4.4 percentage points to 23.1% on the back of lower domestic and international milk prices, Afzal said. Average whole milk powder prices remained at $2,405 per ton in calendar year 2015 compared to $3,496 per ton of the previous year.

Down the line, finance cost also eased by 31% to Rs856 million compared to Rs1.2 billion of the previous year, Afzal said. Internal costs were also reduced on the back of falling oil prices, which plummeted to $29 a barrel as of January 15 compared to $46 a barrel a year ago.

During October-Decemberquarter, Engro Foods reported a net profit of Rs561 million or Rs0.73 per share, down 9% compared to Rs616 million or Rs0.80 it earned in the same quarter last year.

The company’s revenues for the quarter declined by 2% to Rs12.2 billion compared to Rs12.4 billion of the same quarter of 2014, the report said.

When compared with the third quarter of 2015, sales revenue declined by 5% due to seasonal slowdown in sales volumes of Omore (Ice-cream) and Olper’s, a common impact of winters.

Published in The Express Tribune, January 28^th,  2016.

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