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CY13 Results Review - Continues to surprise negatively FLASHNOTE January 24, 2014
EFOODS reported CY13 consolidated net earnings of PKR0.87bn (EPS: 1.14) showing a decline of 66% YoY. While there is a one off impact of PKR209mn (around PKR0.27/share), the real cause of concern is the QoQ dip in operating profit, which saw quarterly operating earnings come in red. Topline improved 9% QoQ due to Tarang discount which seems to have boosted the volumes but being the largest volumetric product, gross margins dropped from 18% in 3q to 13% in the 4q. We have since long remained skeptical about the unjustified high P/E attached with Efoods and reiterate our Sell rating. We will revert back with any changes in earnings outlook, post the briefing update.
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On a cumulative basis, CY13 saw net sales dropping by 6% YoY due to volumetric slowdown (distributor issues) due to which the company wasunable to pass on the raw material price increase, and in fact had to offer price discount on Olpers in 3q, and in Tarang during 4q resulting inoperating margins dipping from 12% to 5% in CY13.
Standalone EPS of CY13 declined by a higher 92% to reach PKR0.28 due to higher one offs (around PKR1.15/share) recognized by the companydue booking of accumulated cash loss of Engro Foods Netherlands (Al‐Safa) after transfer from Engro Corporation to EFOODS books.Fo
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Consolidated result (PKR mn) CY12 CY13 YoY 3QCY13 4QCY13 QoQ
Sales 40,169 37,929 ‐6% 9,091 9,906 9%COGS 29,848 29,752 0% 7,481 8,636 15%Gross Profit 10,321 8,177 ‐21% 1,610 1,270 ‐21%M k i d Di 4 654 5 020 8% 1 131 1 260 11%
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Marketing and Dist 4,654 5,020 8% 1,131 1,260 11%Administrative cost 796 975 23% 189 228 20%Operating profit 4,823 1,960 ‐59% 364 (370) ‐202%Other operating expenses 430 549 28% 48 278 481%Other operating income 382 327 ‐15% 122 126 3%EBIT 4 823 1 960 59% 364 (370) 202%
rus Securitie EBIT 4,823 1,960 ‐59% 364 (370) ‐202%
Finance costs 903 785 ‐13% 188 199 6%Profit before taxation 3,921 1,174 ‐70% 176 (569) ‐424%Taxation 1,326 304 ‐77% 48 (199) ‐515%Profit after taxation 2,595 870 ‐66% 128 (370) ‐390%EPS (Latest shares outstanding) 3.39 1.14 ‐66% 0.17 ‐0.48 ‐390%
Syed Sufyan [email protected]: +92‐21‐35216403
Taur
EPS (Latest shares outstanding) 3.39 1.14 66% 0.17 0.48 390%
Gross Margin 25.7% 21.6% ‐16% 17.7% 12.8%
Operating Margin 12.0% 5.2% ‐57% 4.0% ‐3.7%
Net Margin 6.5% 2.3% ‐64% 1.4% ‐3.7%
