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