Frieslandcampina Engro Pakistan has informed Pakistan Stock Exchange (PSX) about its Financial Result for 2QCY21, today.

It posted 2QCY21 NPAT of PKR867mn (EPS: PKR1.13), double the earnings reported SPLY. This takes 1HCY21 NPAT to PKR1.4bn (EPS: PKR1.84), up nearly 5x yoy. FCEPL continues to impress with consistently high sales delivery (PKR13bn in 2Q), while inflationary pressures have been largely passed on to consumers with GMs rising to 21% vs. 19% SPLY.

2QCY21 Key result highlights include:

FCEPL reported a sharp 26%yoy growth in sales to PKR13bn in 2Q. These are the highest quarterly sales to be reported by FCEPL since its inception, led by strong volumetric growth in all categories – particularly Olpers, complimented by strong marketing campaigns on conversion awareness.

FCEPL took a price increase in Feb’21 which has helped offset inflationary pressures, allowing gross margins to rise to 21.4% in 2QCY21, vs. 19.1% SPLY (and 19.9% in 1QCY21). Reliefs granted under the Federal Budget FY22 will translate July onwards.

Distribution and marketing expenses have understandably increased 30%yoy and 9%qoq to PKR1.1bn. That said, SG&A expenses as % of sales have dropped under 9% in 1HCY21 vs. +9% SPLY.

FCEPL is delivering on all fronts led by impressive sales momentum, leadership within UHT and strong margins delivery. We will look to raise our CY21f estimates and valuation post release of detailed financial accounts.

Courtesy – Intermarket Securities Limited