Engro Foods Limited (EFOODS) once again has done a great job in the first half of the year. As per the company notice to the KSE, EFOODS had received massive boost to both its top line and bottom line during the six months ended June 30, 2015.
The firm’s sale grew nearly, 24 percent year-on-year. The higher volumetric sale of EFFODS flagship product Olpers, recovering Omung sales, growth in ice cream segment and higher selling price can be attributed to this performance.
Despite expansion at the top, core costs remained in check. The cost of sales is increased by nearly 15 percent year-on-year. But as a percentage of sales, it declined by 700 bps to 74 percent. The phenomenon reflected strengthening of the gross margin, which perched high at 26 percent for the period under review. It is very clear that EFOODS has taken advantage of record low international milk powder prices and domestic milk procurement prices. During the 1HCY15, average milk powder prices remained at $ 2,618 per ton compared to $ 4,342 per ton in the first half of 2014.
Up until CY13, EFOODS was having a significant issue with its distribution lines, however in CY14; EFOODS was able to resolve the issues with its distributors.
Due to a robust growth in top line and primarily lower prices of milk and powdered milk, EFOODS closed the first half of the year with a hefty net profit of nearly Rs2 billion, in year-on-year, showing an improvement of amazing 501 percent over same period last year. It has also fattened up the net profit margin from 2 percent year-on-year to 8 percent.
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ENGRO FOODS LIMITED
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Rs (mn) 1HCY14 1HCY15 YoY
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Net sales 20,100 24,898 24%
Cost of sales 16,016 18,366 15%
Gross Profit 4,075 6,532 60%
Distribution and marketing expenses 2,351 2,599 11%
Administrative expenses 724 583 -20%
Other operating expenses 53 211 295%
Other income 97 134 38%
Operating profit 1,043 3,273 214%
Finance costs 610 539 -12%
Profit before taxation 433 2,734 531%
Taxation 104 757 630%
Profit for the year 329 1,977 501%
EPS (RS) 0.43 2.58 -
Gross profit margin 20% 26% UP 600
BPS
Operating profit margin 5% 13% UP 800
BPS
Net profit margin 2% 8% UP 600
BPS
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Source: KSE notice
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