Fauji Foods Limited (PSX: FFL) has announced a remarkable 478% year-on-year (YoY) increase in its profit after tax for the third quarter of 2024, recording Rs223.7 million compared to Rs39 million in the same period last year, according to the company’s latest filing on the Pakistan Stock Exchange (PSX).
The company attributed this strong performance to margin accretive growth, cost reductions, and enhanced organizational capability.
Key Drivers of Growth
1. Margin Accretive Growth:
Nurpur UHT milk continues to be a key growth driver for FFL, remaining the fastest-growing milk brand in Pakistan. Over the first nine months of 2024, Nurpur recorded a 47% increase in revenue compared to the same period last year. The company’s strategic acquisition of a cereal business in February 2024 has further diversified its product offerings, giving FFL a strong foothold in the breakfast segment. This acquisition not only boosts revenue but also positions the company to become a household name at the breakfast table across Pakistan.
2. Cost of Goods Sold (COGS) Reduction:
A significant factor behind FFL’s improved profitability has been its focus on cost efficiencies, which is reflected in the company’s gross margins. Gross margins increased from 11.9% in Q3 2023 to 14.8% in Q3 2024. For the nine months of 2024, FFL’s gross margin rose by 5% compared to the same period last year, reaching 18%.
These improvements stem from the company’s relentless focus on supply chain efficiencies and cost optimization. As a result, FFL reported a significant jump in operating profit, achieving Rs236 million in Q3 2024 compared to Rs68 million in the same quarter last year.
3. Building Organizational Capability:
FFL is also focused on building a world-class organizational capability. In 2024, the company completed its first Management Trainee Program, with plans to expand the program in the future to nurture talent across the organization.
Additionally, the company has prioritized digitization across its business operations to enhance data-driven decision-making, improve efficiency, and unlock further growth opportunities. This focus on technology is expected to continue supporting the company’s overall strategic objectives.
Future Outlook
Looking ahead, Fauji Foods is confident that its continued investment in brands and distribution, as well as its high-margin cereals portfolio, will sustain growth momentum. The company is also set to launch a pasta product later this year, which will further strengthen its culinary portfolio beyond just breakfast products.
With its ambitious growth strategy, FFL aims to become a Rs100 billion business in the coming years, driven by its commitment to “Unleashing Pakistan’s promise in everything we touch.”
As the company leverages its strong brand positioning, expanded product portfolio, and operational efficiencies, it is poised to deliver even better financial performance in the future.
