Fauji Foods Limited (FFL) - May 2023

Fauji Foods Limited (FFL) – May 2023

Research Team

Table of Contents

Fauji Foods Limited (FFL) held a corporate briefing session today to discuss the financial performance of 1QFY23 and highlighted its future outlook.

Key Highlights

• FFL reported an impressive performance in 1QFY23. Net Revenue for the current year was Rs. 5bn billion, an increase of 115.1% compared to SPLY of Rs. 2.4 billion. The increase in revenue was mainly due to higher sales volume and improved distributional strategies.
• EBITDA for the current year was reported at Rs. 253 million compared to SPLY of Rs. 156 million. The increase in EBITDA was primarily due to improved operating expenses, margin accretive growth and reduction of debt and interest costs.
• Company management highlighted the payment of Rs. 8 billion debts in March, 2023. It will help the Company avoid potential interest costs of Rs. 1.5 billion in FY23.
• The net loss after tax was reported at Rs. 170 million that included the interest cost of Rs. 300 million and it is likely to continue in future.
• FFL shared the three pillars of their growth strategy in FY22 and 1QFY23. Value driven approach, COGS reduction and automation of operating processes resulted in the Q0Q growth of the Company.
• In the diverse portfolio of the FFL, the share of commoditized products reduced from 32% to 16% in 1QFY23 while the share of value-added products increased from 68% to 84% during the same period.
• The volumetric growth of FFL was Nurpur (54%), Dostsea LTW(-41%), B2B (18%), flavored milk (10%), Nurpur Cream (98%), Butter (19%). Dostsea LTE witnessed a reduction due to the more focus on value-added products and less on commoditized products.
• 1MW solar project and biomass use in this quarter significantly reduced the Cost of Goods Sold (COGS).
• Company expects a continuous increase in the price of milk. However, the current decrease in price was only seasonal as reported by the company.

Future Outlook

• Going forward, Company management highlighted that FFL will continue focusing on the three pillars of growth i.e., margin accretive growth, COGS optimization and digitization. For this, the digitization of milk processing is under progress while that of sales processes has already been achieved.
• FFL management shared that the Company is resilient and prepared to take up any challenges and the opportunities due to the robust strategies at hand and healthy financials of the Company.
• After the full capacity utilization of localized opportunities, the Company is likely to explore foreign markets in the next few years.

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.

Analyst certification:

The research analyst for this report, certifies that 1.all of the views expressed in this report accurately reflect her personal views about the subject and 2.no part of any of the research analyst’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst in this report.

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