Engro Foods 20012 Results Overview

In 2011 Engro Foods aimed to raise Capital of PKR. 675 million through Initial Public Offering (IPO) of 27 million shares, which were offered to the general public at PKR. 25 per share included PKR 15 per share premium. Capital worth PKR 1. 2 billion was already been generated through sale of 48 million shares to Private investors. The company earned PKR 171 million profit after tax in 2010.

Engro Corporation started business in food industry in 2006 and within a small time frame of Five year, it became a major player in the food industry of Pakistan. 70 million shares of or in other words 93.58% of  Engro Foods paid-up capital is owned by Engro Corporation while remaining 48 million or 6. 42% are owned by private investors. Currently, Engro Foods is engaged in the business of dairy, juices and nectars, ice cream, dairy farms and rice processing.

Engro Foods has also made some investment outside Pakistan by acquiring a Halal food chain. As its first venture EFOODS acquired Al Safa - the oldest Halal meat brand in North America in May this year. During the first quarter, Al Safa brand sales were Canadian $ 2.5 million and loss after tax was Canadian $ 313 thousand. These losses are directly consolidated in Engro corporation financial statements and are not included in the financial performance of Engro Foods.

At the time of IPO different analyst gave different point of views but which I like the most was  An equity portfolio manager at one of the largest asset management companies in Pakistan said

“Engro Foods is a long term growth story, It is definitely worth having in our portfolio and given that it is a small offering, I think this is the time to buy it.”

Engro Foods has raised the highest amount of Rs1.88 billion in the past three financial years through offering new shares. Currently its share price is PKR 67.

Yesterday July 7^th, 2012 EFOODS announced its 1HCY12 results where its Net profit after Tax (NPAT) stood at PkR1, 018mn against Net profit after Tax (NPAT) of PkR217mn in 1HCY11, depicting an EPS of 1.65 as against EPS of 0.29 an increase of 4.7%YoY.

Highlights for 1HCY12 result include:

i)                   Revenue increased by 40%YoY in 2QCY12 reaching PkR10,099mn against PkR7,221mn in 2QCY11 analyst strongly believe that this rapid growth is due to strong volumetric growth in the dairy segment.

ii)                Gross margin increased by 3.1pptsYoY in 1HCY12, keep in view this rise is most likely due to the variations in price like the increase of PKR 10/liter in Olpers and Tarang milk.

iii)              Other income showed a rapid increased of 294%YoY in 1HCY12 to PkR172mn likely due to a better cash position.

iv)              Financial charges decreased by 16%YoY in 1HCY11 to PkR441mn.