FrieslandCampina's revenue decline indicates serious headwinds

FrieslandCampina Engro Pakistan (FCEPL) has reported a decline in quarterly revenue alongside a sharper drop in bottom‑line earnings, underlining the growing strain on the country’s formal dairy sector. The dairy producer’s latest unaudited results show that April–June (Q2) net sales fell year‑on‑year while gross margins improved, only for higher taxation to absorb most of the operating gains and pull down net profit. The board did not recommend any payout for the quarter.

FCEPL’s Q2 revenue slipped to Rs26.47 billion from Rs27.56 billion a year earlier, a decline of just under 4%. For the first half (January–June), net revenue came in at Rs52.49 billion, down 4.6% versus the same period of 2024. On the face of it, the topline contraction points to demand softness in value‑added dairy, a trend the industry has been signalling since the sales‑tax regime was tightened last year.

Beneath the topline, however, the quarter shows a notable improvement in gross profitability. Gross profit for Q2 rose to Rs5.03 billion from Rs4.84 billion last year, lifting the gross margin to 19.0% from 17.6%. For the half year, gross profit improved to Rs9.78 billion (vs Rs9.47 billion), taking the January–June gross margin to 18.6% from 17.2%. The expansion reflects lower input‑cost pressure relative to retail pricing, and some mix and efficiency effects that flowed through cost of sales.