Corporate result: FrieslandCampina Engro records Rs238.8m loss

Published: August 7, 2019


KARACHI: FrieslandCampina Engro Pakistan registered a loss in the half year ended June 30, 2019 due to a notable surge in cost of sales and finance cost amid hike in key interest rate, rupee depreciation and higher inflation.

The dairy foods marketing firm booked a loss of Rs238.79 million in Jan-Jun 2019 compared to profit of Rs511.29 million in the same period of previous year.

Accordingly, it recorded loss per share of Rs0.31 in the half year under review compared to earnings per share of Rs0.67 in the corresponding period of last year, the company reported in a notification to the Pakistan Stock Exchange (PSX) on Tuesday.

Empowering small dairy farmers

The company’s share price inched up Rs0.07 to Rs52.33 with trading in 12,000 shares at the PSX. Net sales of the company surged 22% to Rs18.96 billion in Jan-Jun 2019 compared to Rs15.34 billion in the same period of previous year.

The growth, however, failed to translate into net profit as increased cost of sales offset the revenue growth.

Cost of sales rose 28% to Rs15.63 billion compared to Rs12.21 billion last year. It slightly pulled the gross profit down to Rs3.05 billion compared to Rs3.13 billion last year. Besides, finance cost increased 78% to Rs550.92 million compared to Rs308.60 million.

Other income shrank to Rs251.97 million compared to Rs304.68 million. The company paid tax-on-loss of Rs151.91 million during the six months under review compared to tax refund-on-profit of Rs983.17 million in the same period of previous year.

Alone in the second quarter ended June 30, 2019, the company booked a loss of Rs322.43 million (loss per share of Rs0.42) compared to profit of Rs209.97 million (earnings per share of Rs0.27) in the same quarter last year.

Topline Securities said in post-result comments that the company achieved gross margins of 15% in 2Q2019, down five percentage points. “This was mainly due to inflationary pressure and higher imported raw material cost on the back of rupee depreciation (14% in 2Q2019),” the brokerage house said.

FrieslandCampina wants Pakistan to review duty structure

Financial charges were up 81% owing to increase in the key interest rate. “Finance cost increased amidst rise in short-term borrowings,” it said.

“We flag rising competition, decline in processed milk consumption, any unanticipated regulatory changes and volatility in international raw milk prices as key risks for FrieslandCampina Engro Pakistan,” it said.

Engro Polymer earns Rs1.54b

Engro Polymer and Chemicals Limited’s (EPCL) profit dropped 44.5% to Rs1.54 billion in the half year ended June 30, 2019 because of higher cost of sales and finance.

The profit stood at Rs2.78 billion in the same period of last year, according to a notification sent to the PSX. Earnings per share came in at Rs1.70 for Jan-Jun 2019 compared to Rs3.98 in the same period of last year.

Net sales rose almost 9% to Rs18.60 billion. Cost of sales increased 12% to Rs14.59 billion whereas finance cost soared 144% to Rs727.58 million.

EPCL’s share price dropped Rs0.34 to Rs25.33 with trading in 622,500 shares at the PSX.

Published in The Express Tribune, August 7th, 2019.

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