Fauji Foods Limited (FFL) has reported a significant turnaround in its financial performance, posting a profit of Rs. 38.6 million for the quarter ending on September 30, 2023. This marks a noteworthy improvement compared to the same period the previous year when the company incurred a loss of Rs. 690 million.
For the first nine months of the calendar year 2023 (9MCY23), FFL has reduced its loss after tax to Rs. 108.7 million, a substantial improvement from a loss of Rs. 1.94 billion in the same period of the previous year.
The company’s financial results reveal that it achieved impressive net revenue growth, with a surge of 83 percent during 9MCY23, reaching Rs. 14.7 billion compared to Rs. 8 billion in 9MCY22. In the third quarter (Q3), the company generated revenue of Rs. 4.9 billion, up from Rs. 3.2 billion in the same period the previous year.
Waqas Ghani, Deputy Head of Research at JS Global, commented on FFL’s positive financial performance, attributing it to increased revenue growth, sustained profit margins, and a reduction in financial expenses due to debt repayment. This marks the company’s second consecutive quarter of positive earnings.
FFL noted in its commentary that Nurpur, one of its brands, continues to drive growth, showing a 45 percent increase over the same period the previous year. The success can be attributed to a well-executed marketing campaign and a revamped route-to-market strategy.
Notably, the company’s gross margins have improved from 3.5 percent in the first nine months of 2022 to 12.3 percent in the same period in 2023. This improvement is a result of a continued focus on cost efficiencies, supported by sustainability initiatives, including a 1 MW solar project and biomass utilization, both of which began production in the first quarter of the year, expected to positively impact energy costs in 2023.
These initiatives, along with price increases and cost optimization strategies, contributed to an additional 8.8 percent in gross margin. Consequently, FFL reported a 9-month operating profit of Rs. 258 million, a significant improvement from the Rs. 1.07 billion loss in the same period the previous year, reflecting an increase of Rs. 1.33 billion.
Financially, FFL has also seen a significant reduction in finance costs, with a 98 percent decrease in Q3 and a 62.4 percent reduction in 9MCY23. Marketing and distribution expenses decreased by 5.6 percent in Q3 and 0.15 percent in January-September 2023. However, administrative expenses saw an increase to Rs. 187.6 million during Q3 and Rs. 531.8 million in 9MCY23. Other income for the company increased to Rs. 62.6 million in Q3 and Rs. 189.3 million in 9MCY23.
FFL reported a loss per share of Rs. 0.05 for the nine months and earnings of Rs. 0.02 per share for 3QCY23. The company’s stock on the stock exchange closed at Rs. 6.73, marking a 1.2 percent increase, with a turnover of 19.2 million shares.
In summary, Fauji Foods Limited has shown remarkable financial improvement, with increased revenue, reduced losses, and improved profit margins, highlighting the success of its strategic initiatives and cost-efficiency measures. This positive trend in earnings is expected to have a significant impact on the company’s financial outlook and investor confidence.
