Engro Foods' earnings jump due to tax credit

Profit-after-tax reported at Rs209.97m for April-June

KARACHI: Engro Foods recorded a profit after tax of Rs209.97 million for the quarter ended June 30, 2018, courtesy a hefty tax reversal amounting to Rs196 million.

The turnaround comes after the company posted a loss of Rs145 million for the same period of the previous year.

Accordingly, earnings per share stood at Rs0.27 compared to a loss per share of Rs0.19 for the three-month period of 2017.

Its share price increased Rs2.32 on Friday with a volume of 1.48 million shares trading hands, as the result came slightly better than expectations.

Engro Foods also reported a decline in sales, going down from Rs9.3 billion to Rs8.2 billion in April-June 2018.

Declining sales has been attributed to competition arising from new entrants.



"Contrary to our expectation of a loss during the outgoing quarter, Engro Foods reported profits of Rs210 million mainly due to a tax credit of Rs196 million and higher than expected other income," Topline Securities Nabeel Khursheed said.

Khursheed said the market is awaiting Engro Foods' management clarity on tax credit and higher other income.

"The tax reversal is a one-off event so it shouldn't be considered as a good performance from the company," Sherman Securities Research Analyst Saqib Hussain said.



The company reported gross margins of 19.7%, up by 415 basis points in the second quarter, which has been attributed to better sales mix by the company as compared to last year.

The company recorded half yearly profits of Rs511 million, up by 175% on year on year basis.

 

Published in The Express Tribune, August 4th, 2018.

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