Islamabad
\nFrieslandCampina Engro Pakistan Limited (FCEPL) announced its financial results for Quarter 3, 2024.
\nEffective July 1, 2024, an 18% sales tax was imposed on the sale of UHT milk, which was previously zero-rated. In an environment where the disposable income for an average consumer is declining. The imposition of Sales Tax has severely impacted the processed milk category, leading to a significant decline. This also incentivizes the consumption of loose milk, which is unsafe and remains untaxed.
\nWith an agile business model in place, the company continued to drive cost efficiencies across its value chain, effectively mitigating the impact of inflation. The drive for efficiencies led to an improvement in the gross margin by 60 basis points compared to last year. As a result, the year-to-date profit after tax saw a significant increase of 28% from the previous year.
\nThe growth in profit after tax was driven by the enhanced gross margins and a reduction in tax expense.
\nThe purpose of the company continues to be the provision of nutrition for all Pakistanis. Accordingly, the company has continued to advocate with relevant stakeholders to increase awareness around the benefits of UHT Milk and increase accessibility, driving the school milk program and working towards the safe milk city pilot with the Government.
\nDAIRY-BASED PRODUCTS SEGMENT
\nThe segment reported revenue of Rs. 73.5 billion, reflecting 12% growth compared to the same period last year. The growth was led by flagship brand, Olper\u2019s, through a consistent focus on strengthening the value proposition and driving distribution coverage.
\nOlper\u2019s UHT maintained a strong presence in 2024 with the \u2018Happy Mornings\u2019 campaign across key touchpoints, including TV, digital platforms and in-store. The campaign continued to position Olper\u2019s as an enabler of Happy Mornings by providing high-quality, nutritious, and delicious milk. These efforts across consumer touchpoints strengthened Olper\u2019s leadership in both market share and brand equity within the category.
\nOther value-added brands under the Olper\u2019s umbrella continued to expand penetration across households through a mix of equity-building campaigns and best in class market execution.
\nFROZEN DESSERTS SEGMENT
\nThe segment continued to perform with a growth of 11% vs last year. Consistent investment was made towards the Wow Bharay Deserts\u201d campaign to de-seasonalize the category and leverage broader consumption occasions outside the scope of traditional festivities
\nFINANCIAL PERFORMANCE
\nThe financial performance of the company for the nine months ended September 30, 2024, is summarized below:
\nNine months ended Variation
\n(Rs. in million) 2024 2023
\nNet Sales 82,512 73,819 11.8%
\nOperating Profit 5,941 5,316 11.8%
\n% of sales 7.2% 7.2% 0 bps
\nProfit \/ (Loss) after tax 2,019 1,575
\n% of sales 2.4% 2.1% 31 bps
\nEarnings \/ (Loss) per share (Rs.) 2.63 2.06
\nFUTURE OUTLOOK
\nDespite the implementation of 18% sales tax on the UHT milk category, the company demonstrated remarkable resilience, achieving growth across business segments. With consumer demand under pressure, the company will continue to adapt and respond to the evolving market through relevant consumer offerings and stricter cost rationalizations, to enhance its profitability and shareholder returns.
\nThe company will also continue to engage with relevant stakeholders to implement a level playing field in the milk category. This will help the company pursue its objective of providing better nutrition to Pakistanis, now and for generations to come.
\nLeveraging its global expertise and 150 years of heritage, FCEPL remains committed to the highest standards of hygiene, food safety and sustainability, and providing safe, affordable, and nourishing dairy products to millions of Pakistanis, every day.<\/p>\n","protected":false},"excerpt":{"rendered":"
Islamabad FrieslandCampina Engro Pakistan Limited (FCEPL) announced its financial results for Quarter 3, 2024. Effective July 1, 2024, an 18% sales tax was imposed on the sale of UHT milk, which was previously zero-rated. In an environment where the disposable income for an average consumer is declining. The imposition of Sales Tax has severely impacted […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":{"0":"post-439119","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-business"},"yoast_head":"\n