News milk
Interest depresses Pakistani FrieslandCampina profit
FrieslandCampina subsidiary Engro Pakistan has had a good first half of 2024, but high interest costs are putting pressure on the company's net profit. A high tax on packaged dairy also makes doing business difficult.
Read this article?
Become a subscriber and get instant access
Choose the subscription that suits you
FCEPL, as the name of the company is abbreviated, did very well in terms of turnover. Sales increased by 17% compared to the first half of last year, and this would not be due to a settlement of the tax on packaged dairy that came into effect this year. Total sales amounted to almost €180 million (55 billion rupees), almost €25 million more than last year.
Gross profit rose by 16%, almost as much as turnover, but net profit still took a hit and fell by 6%, from €4,34 million to €4,1 million.
Inflation and interest
Nevertheless, the Pakistani market remains difficult. The economy is not only plagued by rampant inflation, but also by high interest costs. At the beginning of this year, an additional challenge arose when the government in Islamabad introduced an 18% sales tax on packaged milk. The dairy industry in the country was surprised by this and is trying to adapt, but has to live with the new situation. Such a tax does not apply to unpackaged milk. That might also be too politically sensitive.