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Fauji Foods Losses Increase By 73% in 2022 Despite Q4 Recovery

Fauji Foods Limited (FFL) has announced its financial results for the calendar year (CY) that ended on 31 December 2022.

  • The company has posted a loss of Rs. 2.168 billion for CY22, showing a 73 percent increase compared to loss of Rs. 1.25 billion reported in CY21.

Inflationary pressure on the back of devaluation, floods, and macroeconomic uncertainty resulted in a 50 percent increase in raw milk price and other major cost components. That in turn, eroded the margins by around 7 percent in Q2.

FFL responded by increasing prices and deploying cost-saving initiatives. Consequently, the margins were fully restored in Q4. The volume growth, complimented by pricing and efficiency initiatives, delivered a Q4 Earnings before interest, taxes, depreciation, and amortization (EBITDA) of Rs. 383 million (Rs. 77 million excluding one-time sales tax reversal), a 262 percent growth over Q3.

According to FFL’s financial results, it registered a revenue growth of 44 percent to Rs. 12.35 billion during CY22 from Rs. 8.58 billion in CY21, driven by a 66 percent increase in Nurpur UHT milk volume, doubling the institutional sales and distribution increase of 57 percent. This growth was a result of increased marketing investment, distribution automation, and leveraging group synergies.

The cost of revenue was reported at Rs. 11.38 billion as compared to Rs. 7.66 billion last year. The company’s gross profits increased by 5.2 percent to Rs. 0.97 billion from Rs. 0.92 billion in SPLY.

The finance cost of the company increased by 9 percent to Rs. 1.26 billion as compared to Rs. 1.15 billion in the same period last year. Similarly, FFL’s marketing and distribution expenses increased by 31 percent to Rs. 1.34 billion as compared to Rs. 1.02 billion.

Moreover, administrative expenses jumped by 24 percent to Rs. 0.45 billion during the period under review. The company’s other income increased more than twofold to Rs. 0.199 billion as compared to Rs. 0.076 billion in the same period last year.