FrieslandCampina Engro goes from loss to profit

Reports earnings of Rs423.2m for quarter ended June 30, 2020

FrieslandCampina Engro Pakistan posted a profit of Rs423.2 million for the quarter ended June 30, 2020 against a loss of Rs322.2 million in the same quarter of previous year.

Earnings per share (EPS) of the company stood at Rs0.55 in the April-June 2020 quarter against loss per share of Rs0.42 in the same quarter of previous year, stated a notice sent by the company to the Pakistan Stock Exchange (PSX) on Friday.

During the quarter under review, the company reported revenue of Rs10.3 billion compared to Rs9.9 billion in the corresponding quarter of previous year.

“Revenue of the company grew 4.1% during the quarter,” said Topline Securities’ analyst Sunny Kumar in comments to The Express Tribune.

He pointed out that the company turned profitable after it enhanced profit margins by five percentage points to 19% during the quarter. In the same quarter last year, profit margins of FrieslandCampina stood at 14%, he said.

According to Kumar, the increased profit margins could be attributed to the enterprise hiking prices for end-consumers.

“The company imports raw material and the input price inflated over the past two years because of aggressive devaluation of the rupee against the US dollar,” he said. “This time, however, there was no significant rupee devaluation, which gave the company some room to increase its profit margins by hiking prices.”

Finance cost of the company was recorded at Rs386.5 million during the quarter under review compared to Rs318.3 million during the same period of previous year, an increase of 21.4%.

Distribution and marketing expenses fell 21.6% during the quarter to Rs863 million. The company had reported distribution and marketing expenses of Rs1.1 billion during the same quarter of previous year.

“The company’s marketing expenses dropped significantly during the quarter in the backdrop of lockdowns imposed to contain the Covid-19 outbreak,” he said. “On the other hand, the distribution cost declined on the back of low prices of petrol during initial period of the quarter.”

Other income of the company rose 17% to Rs195.7 million compared to Rs167 million in the same quarter of last year.

The company reported half-yearly profit of Rs292.6 million against a loss of Rs238.8 million in the corresponding period of last year.

Published in The Express Tribune, August 22^nd, 2020.

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