KARACHI: Engro Foods Limited (EFOODS) kicked off the results reason on Monday with the announcement of consolidated earnings for the year ended Dec 31, 2014, at Rs868m translating into earnings per share at Rs1.13 compared with Rs870m (eps Rs1.14) the previous year.

The results beat consensus analysts’ expectations, which propelled the Engro Food stock by Rs6.34 to close ‘limit up’ at Rs133.27.

Analyst Nabeel Khursheed at brokerage Topline Securities observed that the earnings growth was mainly due to resolution of distribution issues, which led distribution expenses to decline to Rs4.74bn compared to Rs5.0bn in 2013.

Moreover, tax reversal of Rs394m (eps impact Rs0.51) also helped EFOODS to achieve consolidated profit of Rs868m in the latest year.

During the period under review, the company’s top-line rose by 14pc to Rs43.4bn compared to Rs38.0bn in 2013. However, gross margins dipped to 18.7pc from 21.6pc in 2013.

As a result, operating margins declined by 71bps to 5.0pc in 2014 versus 5.7pc last year.

Other than that, 59pc increase in finance costs to Rs1.24bn, from Rs785m and onetime loss on sale of foreign business amounting to Rs644m (2013: Rs14m) resulted in limiting the growth of earnings.

On quarterly basis, company reported profit of Rs616m (Rs0.81 per share) in 4Q2014 compared to losses of Rs77m (LPS Rs0.10) in 3Q2014 and Rs370m (LPS Rs0.49) in 4Q2013.

Gross margins in 4Q2014 stood at 19.2pc versus 15.1pc in 3Q2014 and 12.8pc in 4Q2013. During the quarter, EFOODS reported profit from continued operation of Rs0.91 per share while losses from discontinued operation settled at Rs0.11 per share.

Published in Dawn January 27th, 2015

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