KARACHI: Fauji Foods Limited (FFL), a dairy and food company and a subsidiary of the Fauji Group, held its second quarterly analyst briefing for 2023 on Monday. The briefing was conducted by Mr. Usman Zaheer Ahmad, CEO, and Mr. Waseem Haider, CFO, who provided an overview of the company’s financial and operational progress.
The company reported a bottom-line profit of PKR 22 million for the first half of 2023, compared to a loss of PKR 1.2 billion in the same period last year. The company attributed its turnaround to improved efficiencies, strategic shift towards larger cities, focus on value-added products, timely price hikes, volumetric growth and higher market share.
The company’s revenues more-than-doubled to PKR 9.8 billion in 1HCY23, while its gross profits surged by nearly 7x to PKR 1.2 billion, resulting in a gross margin of 13%, up from 4% in 1HCY22. The company’s core EBITDA also turned positive at PKR 448 million, compared to a negative PKR 465 million in 1HCY22.
The company’s distribution network expanded to 33,000 outlets, up from 18,000 in 4QCY21, with a significant growth in Karachi, Lahore and Rawalpindi. The company’s market share increased to 8%, with its UHT milk being the fastest-growing brand with a volumetric growth of 51%. The company’s cream segment also grew by 55%.
The company’s CEO said that the company’s long-term strategy to turnaround its operational performance has borne fruit and that the company has been profitable for the past four consecutive months. He said that the company’s vision is to ensure development, production and wide reaching access for the people of Pakistan to safe, nutritious and delicious dairy and food products.
The company’s CFO said that the impact of the hike in electricity tariff by around 20% for residential consumers was not included in the July inflation forecast, but if it is notified by NEPRA before the end of the month, it will increase the inflation estimate by around 0.8%. He also said that the hike in power tariff and the expected increase in gas prices were some of the key requirements of the recently signed SBA with the IMF, which also increased the upside risks to inflation.
The analysts appreciated the company’s performance and asked questions about its future plans, product portfolio, cost structure, debt profile and dividend policy. The company’s management answered the queries and assured the analysts of their commitment to deliver value to the shareholders.
FFL is a dairy and food company that operates under the Fauji Group, one of Pakistan’s largest business conglomerates and welfare organizations. FFL offers a range of products including milk, cream, butter, cheese, yogurt, juices and tea creamers. FFL also offers Roshan Digital Account for overseas Pakistanis to invest in its shares.
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