Consumer goods maintain top-notch profitability
Sector witnessed 28% jump in earnings despite rise in input costs.
KARACHI:
Even though Pakistan has been facing some stiff challenges, the consumer sector has continued to march towards north as it jumped by 28% year-on-year (YoY) and earned Rs13.7 billion in profit-before-tax during 9MCY11.
According to a research report of Investcap on Friday, six of their sample companies (Nestle, Unilever Pak, Unilever Foods, Engro Foods, Rafhan Maize and National Foods) continued to excel, posting a combined solid top line growth of 30% YoY during 9MCY11.
This growth was due to the rise in food inflation-average 15% for 9MCY11-which fueled the top line of the sector, as the sector holds strong ability to pass this on the consumer.
However, due to a slight rise in the input costs during 9MCY11, sector’s gross margins went down 68 basis points to stand at 27.8%. Despite the decline in gross margins, core profitability growth remained in the vicinity of the top line growth as the sector’s bottom line blossomed by 28% YoY.
Engro foods rise as emerging giant
On a relative basis, Engro Foods showed an enormous growth of 993% in its bottom line during 9MCY11 mainly due to low base-effect of last year. The firm’s top line grew by a massive growth of 42% YoY in 9MCY11 while the company’s operating profits grew even faster, 193% YoY, amid stable operating costs.
Next, National Foods showed an impressive profit after tax growth of a colossal 186% YoY in 9MCY11, followed by Unilever Pakistan Foods 37% YoY, Unilever Pakistan 22% YoY and Nestle 21% YoY.
This performance of the sector has also been reflected in the stock performance of the companies during 9MCY11 as the sector as a whole yielded an outstanding 47% YoY (sample growth at 45% YoY) in 9MCY11 as compared to the benchmark KSE-100’s return of negative 2.2% during the same period.
Published in The Express Tribune, November 19th, 2011.
Even though Pakistan has been facing some stiff challenges, the consumer sector has continued to march towards north as it jumped by 28% year-on-year (YoY) and earned Rs13.7 billion in profit-before-tax during 9MCY11.
According to a research report of Investcap on Friday, six of their sample companies (Nestle, Unilever Pak, Unilever Foods, Engro Foods, Rafhan Maize and National Foods) continued to excel, posting a combined solid top line growth of 30% YoY during 9MCY11.
This growth was due to the rise in food inflation-average 15% for 9MCY11-which fueled the top line of the sector, as the sector holds strong ability to pass this on the consumer.
However, due to a slight rise in the input costs during 9MCY11, sector’s gross margins went down 68 basis points to stand at 27.8%. Despite the decline in gross margins, core profitability growth remained in the vicinity of the top line growth as the sector’s bottom line blossomed by 28% YoY.
Engro foods rise as emerging giant
On a relative basis, Engro Foods showed an enormous growth of 993% in its bottom line during 9MCY11 mainly due to low base-effect of last year. The firm’s top line grew by a massive growth of 42% YoY in 9MCY11 while the company’s operating profits grew even faster, 193% YoY, amid stable operating costs.
Next, National Foods showed an impressive profit after tax growth of a colossal 186% YoY in 9MCY11, followed by Unilever Pakistan Foods 37% YoY, Unilever Pakistan 22% YoY and Nestle 21% YoY.
This performance of the sector has also been reflected in the stock performance of the companies during 9MCY11 as the sector as a whole yielded an outstanding 47% YoY (sample growth at 45% YoY) in 9MCY11 as compared to the benchmark KSE-100’s return of negative 2.2% during the same period.
Published in The Express Tribune, November 19th, 2011.