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Karachi, January 24, 2014: The Board of Directors of Engro Foods Limited has announced the financial results for the year ended December 31, 2013.
The year 2013 was a test of the Company’s resilience in turbulent times after consistent growth for a few years back to back. A decline in the dairy and ice-cream industry coupled with operational challenges caused revenues to decline by 6% in 2013.
Appropriate actions were taken to resolve distribution issues in the dairy & beverages segment, resulting in Q4 growth of 15%. As at November 30, 2013, UHT market share was 49% compared to 51% as at December 31, 2012.
The combined result of the aforementioned factors was a decline in profitability by 62% on a like-with-like basis i.e. excluding one-time charges impacting the profitability. These one-time charges include recognition of accumulated cash losses of EFoods Netherlands since inception and a charge related to sales tax for the period when FBR temporarily removed zero rating status of dairy products. The impact of these charges was Rs 881 million, thus dragging the overall profitability for the year down by 92% vs. last year.
As had been reported previously, the entire interest of Engro Foods Netherlands was proposed to be acquired by the Company subject to requisite approvals from the regulators. During the last quarter of 2013, after obtaining the regulatory approvals, the ownership in Engro Foods Netherlands was transferred from Engro Corp to the Company. The acquisition is effective December 16, 2013 and accordingly, the post-acquisition results are included in Engro Foods consolidated financial statements.
Summary of Results for the year ended December 31, 2013
|
Standalone |
|
Consolidated |
|||
| (Rs. in millions) |
2013 |
2012 |
|
2013 |
2012 |
| Net Sales |
37,891 |
40,169 |
37,929 |
40,169 |
|
| Operating Profit |
2,174 |
4,823 |
2,168 |
4,823 |
|
| % of sales |
6% |
12% |
6% |
12% |
|
| One-time expenses |
881 |
– |
208 |
– |
|
| Profit after tax |
211 |
2,595 |
870 |
2,595 |
|
| % of sales |
0.5% |
6% |
2% |
6% |
|
| Earnings per share – basic (Rs.) |
0.28 |
3.43 |
1.14 |
3.43 |
|
| Earnings per share – diluted (Rs.) |
0.28 |
3.40 |
1.14 |
3.40 |
|
FUTURE OUTLOOK:
The Company has now sorted out its distribution issues and is currently selling close to its highest ever volumes. Milk collection is also currently close to its highest ever peak and the new powder plant at Sahiwal is expected to be operational shortly.
Based on Q4 performance, where dairy volumes have grown by 15% vs. Q3 of this year, the Company is confident that the worst is behind and the volume & revenue growth journey of the company has restarted. In January 2014, the company has also taken a price increase on one of its brands to arrest the declining margins.