Fauji Foods Limited (FFL) - July 2023

Fauji Foods Limited (FFL) – July 2023

Research Team

Table of Contents

FFL achieved a remarkable milestone in 1HCY23, reporting its highest sales of PKR 9.837 billion, which marked a substantial 105% year-on-year growth since 2016, compared to PKR 4.797 billion in 1HCY22.

In 2QCY23, the sales continued to soar, increasing by an impressive 95% (PKR 4.669 billion) compared to PKR 2.394 billion in the same period last year.

The Company witnessed outstanding growth in the topline, amounting to PKR 1.231 billion (LPS: PKR 0.07) in 1HCY23, compared to PKR 179 million (LPS: PKR 0.79) in

Moreover, the company managed to significantly reduce its net losses to PKR 147 million in 1HCY23, a considerable improvement from PKR 1.254 billion in the corresponding
period of the previous year (SPLY).

During 2QCY23, FFL achieved a remarkable turnaround, reporting a net income of PKR 22.271 million, a substantial 103.96% increase YoY, compared to a net loss of PKR 754
million during the same period last year.

FFL reported a positive EBITDA of PKR 448 million in 1HCY23, a notable improvement from a negative EBITDA of PKR 465 million in the previous year.

The company experienced a total value growth of 10% in 1HCY23, driven by the strong performance of UHT (24%), butter (25%), cream (113%), cheese (44%), and EM (59%), with only a minor decline of 11% in LTW.

FFL’s distribution network increased to 33,000 outlets in June 2023, up from 18,000 outlets in 4QCY21, fueling the company’s growth.

Additionally, FFL made efforts to reduce its energy costs by shifting from coal to biomass as a source of energy. This transition combined with process optimization and packaging efficiencies is expected to result in savings of PKR 1 billion in CY23.

Furthermore, the company has managed to clear its total debt of PKR 8 billion through an equity injection of PKR 11 billion, making it debt-free.

The economic scenario, including recent devaluation, has led to growing demand for FFL products due to increased import substitution in the country.

Moreover, FFL made significant improvements in receivables, achieving a 54% improvement in 2QCY23, and currently maintains a 45-day cash operating cycle.

Looking ahead, the company has ambitious goals and aims to become a PKR 100 billion company in Pakistan by focusing on accretive growth, expanding its value-added portfolio, and optimizing capabilities.

The Company expects the current inflationary pressure will continue to impact the prices of the products in future.

Important Disclosures



This report has been prepared by Chase Securities Pakistan (Private) Limited and is provided for information purposes only. Under no circumstances, this is to be used or considered as an offer to sell or solicitation or any offer to buy. While reasonable care has been taken to ensure that the information contained in this report is not untrue or misleading at the time of its publication, Chase Securities makes no representation as to its accuracy or completeness and it should not be relied upon as such. From time to time, Chase Securities and/or any of its officers or directors may, as permitted by applicable laws, have a position, or otherwise be interested in any transaction, in any securities directly or indirectly subject of this report Chase Securities as a firm may have business relationships, including investment banking relationships with the companies referred to in this report This report is provided only for the information of professional advisers who are expected to make their own investment decisions without undue reliance on this report and Chase Securities accepts no responsibility whatsoever for any direct or indirect consequential loss arising from any use of this report or its contents At the same time, it should be noted that investments in capital markets are also subject to market risks This report may not be reproduced, distributed or published by any recipient for any purpose.

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