National Foods Limited (PSX: NAFT) announced its financial performance for FY22 recently where the company’s core business earnings (unconsolidated) were seen climbing by a whopping 55 percent year-on-year. The company’s topline grew by 16 percent year-on-year during the year mainly and growth was witnessed in both local and international market. Exports sales mostly to UAE as well as to North America and Europe account for 6-6.5 percent of the total company’s non-consolidated revenues on average primarily through aggressive marketing locally as well as in export markets and brand and consumer led initiatives to drive volume. Thus double-digit revenue growth came from both local and export sales.
High commodity prices and inflation pushed the raw material cost up. Cost of sales increased by increased by 11 percent year-on-year and gross profits were up by 27 percent during the year. However, gross margins for NAFT improved from 30 percent in FY21 to 33 percent in FY22 where cost pressure seems to have been passed on mostly to the consumers.
Distribution and administrative costs increased in by 27 and 14 percent year-on-year, respectively. A major part of the operations is the marketing and sales promotion, which is a big chunk of the distribution cost and the company while aggressively promoting its products has been able to optimize this cost, which is showing in the company’s earnings growth.
Besides the core local and international business, NAFT has controlling interest in A1 Bags & Suppliers Inc., the share of which has been rising in the company’s revenues. On a consolidated basis, the group posted a healthy topline growth of 31 percent, and a bottomline growth of 38percent year-on-year.
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