Fauji Foods Limited Ltd. (FFL) conducted its analyst briefing today to brief investors about 9MCY24 results and shed light on the future outlook:
- In 9MCY24, the company reported net revenue of PkR17.8bn, a 20% YoY increase from PkR14.8bn in the SPLY, driven by higher UHT milk production volumes.
- Gross margins improved to 18% in 9MCY24 from 13% in 9MCY23 due to efficiencies in the supply chain and consolidation of the high-margin cereal business.
- FFL posted an operating profit of approximately PkR1.25bn for 9MCY24, up from PkR379mn in 9MCY23, marking a 230% year-on-year increase.
- FFL made significant progress in enhancing its operations, reporting earnings of PkR560mn during 9MCY24 (EPS: PkR0.24), compared to LAT of PkR109mn (LPS: PkR0.04) during the 9MCY23.
- The industry’s total milk production is approximately 62bn liters annually, of which only 21% is tradable, and only 6% is sold as UHT milk. FFL holds a 14% share of this market.
- The company has recently launched new products, including desi ghee, cereal, and pasta.
- The company plans to export buffalo milk to China through a strategic partnership, which is expected to yield higher margins.
- FFL has doubled its growth over the past two years and is further evolving its portfolio by recently acquiring leading cereal and pasta brands during February ’24, which has helped expand the market presence.
- The company remained insulated from macroeconomic risks due to reliance on locally sourced raw materials and operated without debt.
- The company acquired Fauji Infravest for PkR210mn, whose returns are expected to begin in the upcoming calendar year.
- FFL has experienced significant growth in the UHT milk segment over the past 2 years.
- FFL possesses strong brand equity, which management aims to leverage across its product portfolio. This will eventually result in bottom-line growth.
- Management projects CY29 estimated revenue to surpass PkR100bn, increasing from PkR20bn in CY23.
- The company will collaborate closely with other group companies, including Fauji Meat, Fauji Fresh & Freeze, and Fongrow, to create synergies.
Courtesy – AKD Research
