EFoods profits down 6pc

KARACHI: The profit of Engro Foods Limited (EFoods) dropped six percent to Rs853.27 million for the second quarter of this year on a decline in the company’s sales, analysts said on Friday.

EFoods earned profits of Rs908.67 million in the same quarter last year, said the company’s notice issued to the Pakistan Stock Exchange. During this quarter, the company announced earnings per share (EPS) of Rs1.11 as compared to Rs1.19 in same quarter last year. The company did not announce any dividend. 

Analyst Ibadur Rehman at Elixir Securities said the decline in profitability was mainly due to the decline in net sales. 

Net sales of EFoods remained lower at Rs11.74 billion during this period against Rs12.25 billion last year while cost of sales remained low at Rs8.49 billion compared to Rs9.22 billion last year.

Despite decline in top-line, gross margins increased two percentage points to 27 percent on account of lower cost of production.

EFOODS reported revenue of Rs11.6bn, down 5 percent year-on-year in 2Q2016. 

“We attribute this decline to competition from new entrants, like ‘CupShup’ by Dalda and ‘Dostea’ by Fauji Foods in the tea-whitener category which hurt the market share of EFOODS’ selling brand ‘Tarang’,” said analyst Nabeel Khursheed at Topline Securities.

Although other income remained low at Rs0.33 million against Rs41.05 million, a decline in the finance cost at Rs111.45 million from Rs272.34 million reduced the profit gap.

In April-June, gross margins of the company improved on the back of decline in imported Skimmed Milk Powder price (down 17 percent YoY to $1,758) and increase in price of EFOODS’ second largest packaged brand ‘Olpers’ in the liquid milk category.  

For the half year ended June 30, the company posted profit for the period at Rs1.96 billion, down one percent compared to Rs1.97 billion in the same period last year.