THE NATIONAL FOODS LIMITED

NAJAM KHAN,
Research Associate
July 23 - 29, 2007

National Foods Ltd (NFL) was established in 1970 and later converted to public company from a private one listed in all three stock exchanges of the country. After more than three decades, NFL is one of the biggest food companies with a range of 110 diversified products in 12 major categories while covering 350 towns across the country as well as 35 countries around the world with the services of 409 distributors. There are 6 manufacturing units located at Karachi, Bin Qasim and Lahore. NFL contributes Rs.1 mn everyday and over Rs.350 bn per annum to the economy in the form of tax. NFL has created thousand jobs and currently there are 1500 employees are associated with NFL and building high quality human capital through modern corporate practices and advanced training.

FIVE YEAR FINANCIAL PERFORMANCE

PROFIT & LOSS STATEMENT

RUPESS IN '000

2001

2002

2003

2004

2005

2006

Sales

915136

994637

1135642

1273032

1533879

1847700

Cost of sales

675226

741555

825454

919282

1316727

1276437

Gross Profit

239910

253082

310188

353750

397152

571263

Administration, Selling & Other Operational Expenses

192232

213491

266168

275714

343373

446623

Financial Charges

14149

16518

18843

11640

16006

24850

Other Income

2157

1854

4850

1958

4498

6681

Profit Before Tax

35686

24927

30027

68354

42271

106471

Taxation

8459

3514

10014

22055

11618

36107

Profit After Taxation

27227

21413

20103

46299

30653

70364

Recent financial years were the years of changes and investment in the business. As we have witnessed during FY05-06, gross local sales and gross export sales reached to Rs.2251.339 and Rs.214 mn showing a growth of 22% and 3% respectively as compare to last financial year. On the other hand, 19% or Rs.394.677 mn as compared to last fiscal year increased the gross sales to Rs.2465.457 mn. The company has become aggressive in the sales and promotions of its product, which has resulted in 30% increase in administration and other operating expenses. Financial expenses in the year have increased considerably to Rs.24850 in 2006 from Rs.16006 in 2005 showing an increase of 55.25%.

NINE MONTH PERFORMANCE

NINE MONTHS ENDED MARCH 31, 2007 - UNAUDITED

 

NINE MONTHS ENDED

Rupess in '000

31-MAR-07

31-Mar-06

NET SALES

Local

1,675,601

1,328,988

Export

186,077

148,721

 

1,861,678

1,477,709

Cost of sales

1,210,605

1,025,899

Gross profit

651,073

451,810

OPERATING EXPENSES

Distribution cost

448,023

296,913

Administrative expenses

64,875

48,916

Other operating expenses

8,604

7,023

 

521,502

352,852

 

129,571

98,958

Other income

8,772

3,133

Profit from operations

138,343

102,091

Finance cost

34,117

22,220

Profit before taxation

104,226

79,871

Taxation

33,791

22,088

Profit after taxation

70,435

57,783

Basic and diluted earnings per share

16.57

13.59

Local and export sales during nine months of FY06-07 were Rs.1,675,601,000 and Rs186,077,000 showing the growth of 26% and 25% respectively while comparing to same period last year. Profit after tax has reached to Rs. 70,435,000 from Rs. 57,783,000 showing an increase of 22%. The company has registered Rs.448,023,000 and Rs. 64,875,000 and Rs. 8,604,000 as distribution cost, administrative and other operating expenses respectively showing 51% 33% and 23% respectively.

FUTURE OUTLOOK

In the coming years, NFL's top priority is to maintain top line growth and to enhance profitability growth. With a vision of Rs.50 bn food company by launching products and services in the domestic and international markets that improve the lifestyle and are looking confident to achieve their vision 2020 even before the time.