FrieslandCampina Engro Pakistan Limited (FCEPL) announced its financial results for the year ended December 31, 2024.
Despite experiencing 17% year-on-year sales growth in the first half of the year, driven by strong brand initiatives, increased consumer awareness, and customer-centric offerings, the imposition of an 18% sales tax on packaged UHT milk in July 2024 had a severely adverse impact, leading to a substantial decline in packaged milk volumes in the second half of the year.
This taxation directly undermines government priorities to improve access to safe nutrition and support farmer livelihoods. The price gap between packaged and loose milk incentivizes the consumption of potentially unsafe loose milk, threatening public health.
It also restricts dairy companies’ ability to continue to invest in essential dairy development programs that support farmer capacity-building and provide financial assistance, jeopardizing farmer livelihoods.
The tax implementation further fuels the growth of the undocumented dairy sector, negatively impacting established dairy companies’ ability to maintain efficient cost structures and hindering competitiveness in export markets. The nascent dairy export segment, which had recently gained significant traction, now faces serious challenges and will negatively impact the future of Pakistan’s dairy industry.
FINANCIAL PERFORMANCE
The financial performance of the company for the year ended December 31, 2024, is summarized below:
| Full Year ended Dec 31, 2024 |
Variation | ||
| (Rs. in million) | 2024 | 2023 | |
| Net Sales | 107,051 | 100,235 | 7% |
| Operating Profit | 6,835 | 6,117 | 12% |
| % of sales | 6.4% | 6.1% | 28 bps |
| Profit / (Loss) after tax | 2,203 | 1,509 | |
| % of sales | 2.1% | 1.5% | 46 bps |
| Earnings / (Loss) per share (Rs.) | 2.87 | 1.97 | |
The dairy segment of the business grew by 6.4% in 2024, while the frozen dessert segment grew by 13% in the same period.
Future Outlook
In 2016, Royal FrieslandCampina made one of the biggest foreign direct investments (USD 450 million) in Pakistan’s dairy sector. Since then, the company has made considerable investment behind increased access to nutrition and improving farmers’ livelihood. However, the continued sales tax on packaged milk poses a major challenge to the packaged milk industry and eliminates the company’s ability to continue this investment.
FrieslandCampina Engro is actively working with the Government of Pakistan to find solutions that ensure a sustainable future for the packaged dairy industry, in line with global taxation practices for milk products, where rates are typically zero or reduced in both developing and developed economies. This collaboration is crucial to safeguard public health by promoting access to safe, nutritious milk, support farmer livelihoods through continued investment in development programs, and boost competitiveness by strengthening Pakistan’s position in international markets.
