Fauji Foods Ltd Makes Big Turnaround Posting A Massive Profit in 2023

Fauji Foods Limited (PSX: FFL) has posted a Rs. 605 million profit for the year that ended on December 30, 2023, a big turnaround from a loss of Rs. 2.16 billion in the same period last year. The company did not announce any bonus shares or cash dividends for the period in review. According to FFL’s financial results, it registered net sales of Rs. 19.8 billion, up by 60.3 percent during CY23 compared to Rs. 12.3 billion in CY22. In a brief commentary, FFL explained that it delivered Rs. 605 million profit after tax (PAT) in FY23. The company has now been in the green for nine months. The three strategic pillars of a) Margin Accretive Growth b) COGS reduction and c) Capability Development helped deliver a Revenue of  Rs. 19.8 billion (+60 percent), GP of Rs. 2.98 billion (+207 percent), EBITDA of Rs. 1.09 billion (443 percent). The PAT includes deferred tax income of Rs. 596 million. During CY23, the finance cost of the company shrunk by 74 percent to Rs. 323.8 million as compared to Rs. 1.26 billion in the same period last year. FFL’s marketing and distribution expenses decreased by 1.1 percent to Rs. 1.32 billion in CY23 compared to Rs. 1.34 billion in SPLY. Nurpur continued to drive volume growth. The successful marketing campaign and Route to Market have ensured that Nurpur remains the fastest-growing UHT milk in Pakistan for a second successive year. The strategic pivot to margin accretive portfolio continues to deliver results as the entire value portfolio grew by 98.5 percent in value. FFL reported earnings per share of Rs. 0.26 for the period in review, compared to an LPS of Rs. 1.37 in CY22. The commercial sustainability is reflected through an improved structure of the P&L as Gross Margins increased from 7.8 percent to 15.1 percent in 2023. This was achieved through a focus on cost efficiencies backed by twin sustainability projects of 1 MW solar and biomass. These projects along with optimized sourcing and improved efficiencies across the entire value chain helped counter the high inflation in 2023. At the time of filing, FFL’s scrip at the bourse was Rs. 10.71, up 5.83 percent or Rs. 0.59 with a turnover of 24.9 million shares on Tuesday.