FrieslandCampina Engro Pakistan Limited posted profit after tax of Rs177 million for the year ended December 31, 2020 despite a challenging cost environment and high food inflation.

According to a notice sent by the company to the Pakistan Stock Exchange (PSX) on Tuesday, the food company had posted a loss of Rs954.9 million in 2019.

Accordingly, earnings per share of the company came in at Rs0.23 in 2020 compared to loss per share of Rs1.25 in 2019.

Revenue rose from Rs38.6 billion in 2019 to Rs44.2 billion in 2020, depicting a growth of 14% despite Covid-induced lockdowns and closure of retail and leisure outlets.

“The overall cost environment remained challenging, with high increases in commodity costs in the last 12 months due to a record food inflation and devaluation of Pakistani rupee,” the company said in a statement.

In particular, the enterprise faced a sharp hike in the cost of milk which was a key input for the company, it said.

Keeping the toughening situation in view, the company made efforts to enhance efficiency and as a result, it achieved an 80-basis-point improvement in gross margins compared to fiscal year 2019.

Despite the lockdowns, distribution and marketing expenses shrank 0.48% from Rs3.68 billion in 2019 to Rs3.66 billion in 2020. The company also continued to drive efficiency in distribution and administrative expenses through multiple cost optimisation initiatives, it said.

The macroeconomic environment of the country remained challenging for both consumers and businesses amidst the Covid pandemic, it said. The firm foresaw a tough operating environment in the future owing to declining purchasing power and soaring costs.

Other operating expenses dropped to Rs177.2 million in 2020 compared to Rs246.9 million in the previous year, a decline of 28.2%. During the year, finance cost of the firm inched up 1.41% to Rs1.24 billion. The company had spent Rs1.22 billion under the head in 2019.

The dairy and beverage segment of the company registered 17% growth in revenue to Rs40.5 billion compared to the previous year. During the year, FrieslandCampina Engro continued the expansion of its retail footprint and explored new channels and routes to the market.

The ice cream and frozen dessert segment was impacted by the closure of retail and leisure spots in the wake of Covid-19 lockdown, said the company. As a result, the segment reported revenue of Rs3.6 billion in 2020 against Rs3.9 billion in 2019.

Published in The Express Tribune, February 10th, 2021.

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