FrieslandCampina Engro Pakistan Profit Declines By 6% to Rs. 1.26 Billion in H1 2024

FrieslandCampina Engro Pakistan Limited (FCEPL) announced its financial results for the first half of the year, concluding on 30th June, 2024. Its profit after tax declined by 6 percent to Rs. 1.26 billion compared to Rs. 1.33 billion in the same period last year) due to a significant increase in interest rates. The company achieved 17 percent growth (revenue of Rs. 55.0 billion, compared to Rs. 47.0 billion in the same period last year) fueled by a favorable portfolio mix, effective market investments, and distribution expansion. The company also witnessed a gross profit growth of 16 percent maintaining gross margins despite the inflationary pressures on commodities and energy prices. This performance demonstrates the company’s resilience and ability to adapt to market conditions. The segment reported revenue of Rs. 48.87 billion, reflecting a growth of 18 percent vs the same period last year. Olper’s UHT continued to maintain its presence with the ‘Happy Subah’ campaign across key touchpoints, including TV, digital, and in-store. These consistent efforts across all relevant consumer touchpoints have strengthened Olper’s market and equity leadership in the category. Value-added brands including Olper’s Cream, Olper’s Cheese, Dobala, and Tarka continued to gain volume despite competition from established players. Despite the challenging start of the year, the segment reported a revenue of Rs. 6.16 billion, a 13 percent growth vs the same period last year. This was enabled due to continuous investment behind the brand through our newest campaign “Wow Bharay Deserts”, creating occasions consumption outside traditional festivities and exemplary in-store execution. Through the Finance Act 2024, the government has imposed an 18 percent sales tax on the sale of packaged milk. This statutory change has resulted in a significant increase in the prices of packaged milk. As milk is a necessity, this price increase will add more financial strain on consumers who are already struggling with declining purchasing power. Furthermore, this change has widened the gap between packaged milk and loose milk, the latter of which remains untaxed and unregulated. This disparity may drive consumers towards loose milk, which could have implications for public health and safety due to the lack of regulation. The company is actively engaging with relevant stakeholders through the Pakistan Dairy Association to communicate its position and inform them of the broader impact by highlighting how this tax will affect various Government priorities, including ensuring nutrition for all and expanding the documented economy.