Corporate results: Engro Foods’ profit jumps 933% during Jan-Sep

Earnings recorded at Rs2.6b compared to Rs252m last year

KARACHI: On the back of high volumetric growth, Engro Foods increased its net earnings by more than nine folds to Rs2.6 billion in January-September period of 2015 over the comparable period of last year, the company revealed on Monday.

A subsidiary of Engro Corp. - Pakistan’s largest private-sector conglomerate - the local foods giant reported an after-tax profit of Rs2.6 billion or Rs3.4 per share during the period under review, up by a staggering 933% compared to Rs252 million or Rs0.33 per share it earned in the same period last year.

However, the results were slightly below street consensus, according to market analysts.

“Gross margins witnessed a seasonal dip as milk procurement cost rises in ‘Lean’ season,” Taurus Securities said in a report. “Therefore, gross profits declined by 7% quarter-on-quarter (QoQ) to Rs2.9 billion,” it said adding distribution cost also increased by 9% QoQ due to higher advertisement expenses in Ramadan. “Consequently, net earnings [in July-September quarter] witnessed a decline of 31% QoQ to Rs624 million,” it added.

Opening at Rs158.24 per share, the stock reached a high of Rs160.95 intra-day and settled at Rs157.47 at the close of business on Monday with nearly 1.8 million shares changing hands.

Profit-yielding products

The company’s revenues during the nine-month period ending September 30, 2015 improved significantly on the back of higher volumetric flows in Olper’s, Tarang and Omore brands, the report said.

The company’s revenues clocked in at Rs37.7 billion during January-September period, up 22% compared to Rs30.7 billion it grossed in the corresponding period of 2014.

Resolution of its distribution issues, better law and order situation and lower inflation leading to higher disposable income and consumer spending helped Engro Foods increase its market share in UHT segment from 53% in third quarter of 2014 to 56% in the same quarter of 2015, Topline Securities said in a report.

The company raised price of its second largest dairy product ‘Olpers’ by approximately 10% year-on-year (YoY) in the first half of 2015, which also supported its revenues in the latest quarter, Topline said.

Published in The Express Tribune, October 20^th, 2015.

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