A year after going public very quietly, Big Bird Foods has made a profit. Here’s what happened 

Big Bird Foods has set an early marker for the year by registering a profit for the first quarter. Can this small player in a big market leverage this to grow their business? 

In the first financial year since they became a presence on the stock exchange, Big Bird Foods has posted a profit of Rs 27 crores, giving their shareholders earnings of Rs 0.9 per share. 

Big Bird is a bit of an oddity in the frozen foods market where financial data is generally a closely guarded secret, and few companies are publicly traded. In this market, they are the only publicly listed company and they too only listed a year ago. Despite this, the profit Big Bird has posted might not seem like much considering just how large this market is. 

There is a glut in the market in terms of competition for frozen foods. The market already has PK meats, K&Ns, Sufi and Dawn foods just to name a few. By a conservative measure, the frozen food market is worth $730 million in 2024 and it is expected… that this market size will increase to around $1 billion by 2030 with an average growth rate of 5.81%. Currently Big Bird makes up less than 5% of the market but it has been able to see steady growth in terms of revenue growth in recent years. Big Bird will want to capitalize on this opportunity and increase its market share in the coming year. 

This might seem like peanuts in comparison to the rest of the market but this is a growth of 32% from where the company stood last year earning Rs 0.68 per share. More importantly, Big Bird had been suffering losses on the trot for some years. The change in fortunes will mark an important moment for Big Bird. The first quarter performance compliments the annual results for the company where it showed a profit of Rs 84 crores where it had earlier made a loss of Rs 12 crores. The company seems to be coming out of the shadows of its past performance and is setting a new path for itself going forward.

Big Bird’s listing story

The frozen food market is actually one segment where the Pakistani market is quite robust, with K&Ns in particular also an exporter with the largest share of the market. Which is why one might expect that if a frozen food company goes public, there would be a lot of noise surrounding it. 

However, Big Bird did not go through the traditional pomp and pageant of an Initial Public Offering (IPO), instead getting on the stock exchange through a different route. 

Essentially, Big Bird took over a company called MetaTech Trading which was listed on the market. Rather than having to go through the process of listing a company from scratch, Big Bird took over the ailing company and then changed its symbol and name to Big Bird Foods. This allowed the listing of Big Bird to take place and it started trading. They shelved the previous functions of MetaTech. 

Big Bird was founded in 2011. The company operates end-to-end in the frozen chicken business, and is involved in poultry farming, slaughtering, processing and supply of finished and semi finished products into the market. They have a solid presence in the retail market and their products are available in most large stores. The company boasts a large array of ready to cook chicken products which have established their name and brand in the market. 

Changing losing trends 

In terms of financial performance, the company has been making losses for the last three years due to shrinking gross margins and operating costs. The company saw losses of Rs 83 crores in 2021, 30 crores in 2022 and 12 crores in 2023. The recent results finally show that the company is turning a corner and becoming profitable. The reason for the losses was due to the fact that the company was establishing itself in a cut throat market and was trying to carve out a space for itself. Now it seems the company is finally gaining a foothold with a steady stream of revenue and profitability.

The latest annual accounts show that the company is expanding its revenue base and earned revenues of Rs 7.2 billion compared to Rs 6 billion in 2023. Even though the company was able to grow revenues by 20%, it saw its cost of goods sold only increase from Rs 5.5 billion to Rs 5.6 billion leading to gross profits clocking in at Rs 1.6 billion. The gross profits almost tripled from where they were a year ago coming in at only Rs 57 crores. Due to inflationary pressures, Big Bird saw its distribution and administrative expenses grow. Due to high gross profits, the company still saw its operating profits go from Rs 31 crores in 2023 to Rs 1.2 billion in 2024. The company was also able to reduce its finance costs which led profit after tax to register at Rs 84 crores compared to a year ago when the company suffered a loss of Rs 12 crores.

Things seem to be going from good to better for the company as the first quarter results show that the company has been able to increase its revenues from Rs 1.8 billion in the first quarter of 2024 to Rs 2.2 billion in the recent quarter ended. With similar gross profit margins, the company earned Rs 49 crores in gross profit compared to Rs 39 crores one year ago. Even with rising operational costs and expenses, the company was able to show operating profits of Rs 39 crores which had been Rs 32 crores last year. One issue for the company was that it saw an increase in finance cost of around 12% as its interest payments increased from 10 crores to 11 crores this year. Regardless of this increase, the company still ended up earning profits of Rs 27 crores compared to Rs 20 crores last year. The company was still able to see its bottom line grow by 35% as it saw an increase in its revenues. The upward trajectory seems to be 

subsisting for the time being.

How they did it 

This trend can be expected to continue as well as the company is signing contracts with long term customers like Johnny & Jugnu, Pizza Junction and Al Khan Catering in Lahore. The company already has its own store outlets which are selling its products. The company has also been able to secure contracts with new retail outlets in Lahore and Karachi which are allowing it to expand its revenue base. The company estimates that these contracts will yield an additional revenue of Rs 80 crores to Rs 1 billion to the annual sales of the company which will further increase the potential revenues. 

Big Bird has also introduced a new product in its portfolio by offering raw fish filets and raw fish fingers as part of its product line. Big Bird feels that there is a growing consumer demand in this area and wants to cater to these demands by supplying fish based products. There are estimates that the fish and seafood industry is around 700,000 tons on an annual basis and it is growing between 4 and 5% per annum. Big Bird wants to tap into this market by providing these products initially before expanding further.

In addition to the local market, Big Bird is an approved supplier for Saudi Arabia and is part of the supply chain of McDonald’s in Qatar and Oman. The company also exports products in Hong Kong and China through direct and indirect means. Big Bird is also contracted to big corporate brands like Jalal Sons, Kababjees, Kitchen Cuisine, Hyperstar, Alfatah, Serena Hotel, Dawn Foods, KFC and McDonalds. The company is looking to establish itself in the market as a stable supplier and aiming to be the sole supplier to many of its biggest clients who are sourcing their raw materials from multiple sources.

Zain Naeem
Zain Naeem
Zain is a business journalist at Profit, and can be reached at [email protected]

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