KARACHI – Engro Foods Limited (EFOODS) announced consolidated earnings for the year ended Dec 31, 2014, at Rs868m with earnings per share at Rs1.13, versus Rs870m with earnings per share at Rs1.14 of the previous year. Its operating margins declined by 71bps to 5.0pc in 2014 versus 5.7pc last year.
The earnings beat analysts’ expectations, which propelled the Engro Food stock by Rs6.34 to close ‘limit up’ at Rs133.27.
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, Analyst Nabeel Khursheed at brokerage Topline Securities observed. 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, its 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. 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.
