Unity Foods Limited (UNITY) announced its 9MFY21 financial result today, recording profit after tax of PKR 2,868mn (EPS: PKR 3.21), up by 48x YoY compared to PKR 60mn (EPS: PKR 0.09) in same period last year. During 3QFY21, the company posted profit of PKR 1,275mn (EPS: PKR 1.24) compared to a loss of PKR 315mn (LPS: PKR 0.53) and earnings of PKR 923mn (EPS: PKR 0.92) in 2QFY21, respectively.

Result Highlights

· Net sales of the company increased by 138% YoY during 9MFY21 to PKR 49.8bn due to i) drastic increase in sales of edible oil (including bulk oils and consumer packs), ii) Double digit growth in sales of animal feed, and iii) massive surge in prices of edible oil which is directly linked with international palm oil prices. On a quarterly basis, the company recorded highest ever quarterly sales of PKR 20bn, up by 108% YoY in 3QFY21 due to i) increase in customer base, ii) higher demand of edible oil and wheat flour given seasonality factor, and iii) surge in international prices during the period under review.

· Gross margins settled at 8.42%, up by 369bps compared to 4.73% in 3QFY20 on account of economies of scale and surge in prices resulting in inventory gains.

· In 3QFY21, distribution costs increased by 67% YoY to PKR 380mn compared to PKR 228mn in 3QFY20. Increase in distribution cost is attributable to increase in business activity.

· Despite decline in interest rates, finance costs increased by 82% YoY to PKR 282mn in 3QFY21 due to surge in borrowings to meet capital expenditure requirement.

Courtesy – AHL Research