Engro Foods’ net profit grew by four per cent to Rs 1.1 billion during January-March quarter of 2016, the company revealed in its financial report to the Pakistan Stock Exchange on Tuesday. According to details, this was Engro Food’s highest ever quarterly earnings.
The local foods giant reported an after-tax profit of Rs 1.1 billion or Rs 1.45 per share, up four per cent from Rs 1.06 billion or Rs 1.39 per share of the same quarter of 2015. The company’s share price increased by Re 0.92 or 0.5 per cent from the last day’s price (Rs 154) and closed at Rs 154.92 per share. A total of 42,10,500 shares of EFOODS changed hands at the end of the market on Tuesday. The result was above market expectations, say market analysts.
“EFOODS reported earnings growth of four per cent year-over-year which was above market estimates,” Topline Securities said in its report. Explaining, it said the increase in profit was on account of higher gross margins. However, the net sales had seen a decline.
“Although, we await management clarity on the dip, we attribute it to the downward price revision of EFOODS’ liquid tea whitener, Tarang, in the outgoing quarter,” Topline said.
A subsidiary of Engro Corp, the maker of Olper’s reported Rs 3.3 billion in revenues during the first quarter of the year, a decrease of 1.3 per cent compared to Rs 3.34 billion it earned in sales during the corresponding period of 2015. The company’s gross margin, on the other hand, clocked in at 28.13 per cent during the quarter, up by 1.3 percentage points from 26.8 per cent of the same quarter of 2015.
“The company has achieved slightly better results than market expectations as the loss of milk products is very low,” Taurus Securities’ Head of Research Zeeshan Afzal said. Giving outlook of the next quarter, the analyst said the profit of April-June quarter remains almost always significant, therefore, the progress of the entire fiscal year 2016 is expected to be substantial.
Although, the result for the quarter is notable and the financial year is expected to end with considerable growth, the market analysts warned of key risks for the company in the wake of unanticipated rise in international milk powder prices and competition from new entrants in tea whitener segment – an important category for EFOODS, which drives 45 per cent of its revenue from its tea whitener, Tarang.