Above the market’s expectations, Engro Foods posted a net profit of Rs331 million or earning per share of Rs0.43 for the three-month period ended March 31, 2017, down significantly by 70 per cent against the Rs1.1 billion (EPS: Rs1.45) the company earned in the same period last year.
In the quarter under review, Engro Foods recorded earnings of Rs8.8 billion, down 25 per cent from last year’s Rs11.7 billion.
‘’During the period, the dairy producer witnessed a huge slump in its top-line amid declining volumes on account of stiff competition from new competitors and aggressive marketing done by some of the existing players,’’ said a report released by Taurus Research.
Similarly, gross margins of the company witnessed 8.5pc decline to settle at 19.6pc as compared to 28.1pc in the same period of 2016.
“The reduction in margins is due to 28pc YoY surge in average SMP prices for the quarter, 12pc YoY increase in average HPO prices, an imposition of 25pc Regulatory Duty on import of SMP, and an introduction of technical assistance fees to be paid to the parent company,” the report further explained the results.
Sequentially, a decline of 79pc in the finance cost was also witnessed in the first quarter results. Due to the repayment of long-term loans – amid lower interest rates and effective tax rate of 21pc – the finance cost settled at Rs56 million. The decline in finance cost provided support to the diminishing profitability of the company.
The company share price depreciated by Rs3.69 to close at Rs160 on Thursday. A total of 504,600 shares of EFOODS changed hands at the end of the session.
