KARACHI: Engro Foods Limited has posted a loss of Rs145 million in the second quarter ended June 2017 compared to a profit of Rs853 million in the same period of previous year, according to a company notice sent to the Pakistan Stock Exchange (PSX).
“The result was significantly lower than estimates,” a Topline Securities’ report said on Friday. The loss was primarily due to lower gross margins (which were several percentage points below expectations), the worst in a second-quarter result, it added.
Loss per share stood at Rs0.19 in April-June 2017 compared to earnings per share of Rs1.11 in the same quarter in 2016.
The KSE 100-share Index closed at 45,288, down 345 points or 0.76% on Friday. Engro Foods’ share price closed at Rs111.98, down 5%.
Net revenues in the April-June quarter dropped 19% year-on-year. The company has been facing fierce competition from new entrants in the tea-whitening category, which has hurt sales of its flagship tea whitener ‘Tarang’.
Although the company has come up recently with promotional campaigns to boost its market share in the tea-whitening category, they did not bear much fruit, the report said.
Engro Foods reported its worst gross margins in a second quarter, down 11.2 percentage points to 15.6%.
This considerable decline was due to lower volumetric sales, down about 20-30%, which pushed up fixed charges, and because of changes in the tax regime under the federal budget 2016-17, which substantially increased the cost of doing business for the UHT industry.
Moreover, an increase in duty on milk and payment of 0.5% technical fee and 2% of net revenues to Engro Corp and Royal FrieslandCampina respectively also hit the company.
Although the company increased prices of UHT milk by about 5% on a yearly basis to Rs120 per litre, it was not able to fully pass on the sales tax and duty impact.
Published in The Express Tribune, August 12th, 2017.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ