National Foods sees profits grow 35% to Rs588m

Attributable to growing local sales and gross margins .

KARACHI:

National Foods – one of Pakistan’s leading diversified food manufacturers – reported a profit growth of 35% for the first nine months of fiscal 2013 to Rs588 million as its local sales went up despite no support from exports.

The company says that exports have been declining due to global recession, however the multi-category food producer has worked on a strategy, what they call a 20/20 vision, to boost local and export sales through promotional events. According to its 20/20 vision, National Foods aims to become an Rs50 billion company.

Local sales climbed 14% to Rs5.53 billion in the period under review, while export revenues fell marginally, which means that National Foods’ promotional campaigns are attractive enough to be working.

Overall gross margins improved by 390 basis points to 35.9% on the back of better sales mix as sales of some of company’s higher margin products grow and cost containment measures take effect.

Profitability was supported further by surging other income and falling finance costs. The management of National Foods prefer to invest in mutual funds, which turned out a great return on investment over the period, as the company’s other income jumped 91% to Rs53.24 million.

Furthermore, as State Bank of Pakistan cut the benchmark interest rates by 250 basis points in the period under review and smart cash flow management by the food manufacturer realises, finance costs fell to Rs55.5 million from Rs58.9 million during the period.

National Foods started its journey in 1970 as a spice company. Now 43 years later, the Group’s products include recipe blends, dehydrated vegetables, pickles, salts, snack foods, desserts, and a number of kinds of health foods.

Published in The Express Tribune, April 25^th, 2013.

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