News water disaster
FrieslandCampina: 'Little nuisance from the Pakistan disaster'
Although about a third of Pakistan is under water, FrieslandCampina says it has little trouble. However, the Pakistani subsidiary of the dairy cooperative is busy providing aid. The water disaster is a business threat. This is because of the sharp devaluation of the Pakistani currency and the blow that the economy is likely to receive. In the first half of this year, FrieslandCampina saw its turnover in Pakistan rise sharply.
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Due to persistent monsoon rains, Pakistan has been hit by a serious water disaster that has recently attracted increasing attention in the Western media. 33 million inhabitants of the country are affected to a greater or lesser extent. More than 1.300 deaths have also been reported. Engro Foods, the Pakistani subsidiary of FrieslandCampina, has almost twenty locations in Pakistan. This spread in the processing chain means that FrieslandCampina has so far experienced little inconvenience from the heavy flooding, a spokesperson said. The production chain has not yet been seriously disrupted.
However, it is inevitable that FrieslandCampina will (indirectly) suffer the consequences of the extreme water disaster. After all, millions of residents have been affected, for which, according to the United Nations, urgent help is needed. FrieslandCampina itself is also actively involved in various aid initiatives. Food and shelter are provided, among other things.
Pakistani rupee severely depreciated
The Pakistani water disaster will probably also have an impact on the results, although FrieslandCampina does not want to anticipate that. For example, the Pakistani rupee has recently been significantly depreciated against the dollar. A month ago, the currency slid to a new record low. However, there has been a slight recovery afterwards. In any case, the currency was already one of the worst performing currencies worldwide. The weak currency has already weighed on the dairy cooperative's results in recent years.
In the first half of this year, Engro Foods saw sales increase by as much as 25% to 30,771 million Pakistani rupees. Due to increased interest costs and higher taxes, net profit fell by 33% to 938 million Pakistani rupees. Due to the major blow that the economy in Pakistan will most likely suffer, the market prospects for the dairy cooperative are bleak.