KARACHI: Posting its highest-ever quarterly earnings, Engro Foods reported on Tuesday a net profit of Rs1.1 billion for Jan-Mar, up 4% from the same three-month period of 2015.
The result, which did not contain any cash dividend, was higher than market expectations.
Although the year-on-year increase in profit was rather small, earnings jumped enormously on a sequential basis in the first three months of 2016. Bottom line growth on a quarterly basis clocked up at 97.5% mainly because of improved gross margins in Jan-Mar.
Despite an uptick in the bottom line of the company, revenues shrank roughly 7% on a year-on-year basis to Rs11.7 billion. According to AKD Securities, gross margins increased 80 basis points to 28.1% in Jan-Mar on account of the downtrend in international dairy prices and seasonality.
“While Jan-Mar result has surprised positively, we believe revenue shrinkage remains a persistent problem.
Vigilance in this regard is a must, given the increasing competitive pressures, particularly in the tea whitener segment where Engro Foods commands market leadership,” it said while referring to new brands of CupShup and DosTea introduced by rival food companies.
Above-expectation earnings report resulted in the Engro Foods stock closing up by 0.6% to Rs154.92 per share.
Published in The Express Tribune, April 20th, 2016.
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