FrieslandCampina Engro Pakistan Limited (FCEPL) has released its financial results for the year ending December 31, 2024. The company recorded a 7% increase in net sales, reaching Rs. 107 billion. Strong brand initiatives and growing consumer awareness fueled growth in the first half of the year. However, an 18% sales tax on packaged UHT milk, imposed in July 2024, severely impacted sales in the second half.
The new taxation policy caused a sharp decline in packaged milk volumes. The company stated that the tax undermines the government’s goal of improving access to safe nutrition. The price gap between packaged and loose milk has widened, pushing consumers toward unregulated and potentially unsafe loose milk. This shift raises serious public health concerns.
Challenges for Farmers and the Dairy Industry
FCEPL warned that the tax hurts dairy farmers by limiting investment in development programs. These programs provide financial assistance and training to farmers. The company also stated that the tax encourages the undocumented dairy sector, making it harder for regulated dairy businesses to remain competitive.
Financial Performance Overview
FCEPL’s financial results show:
- Net sales: Rs. 107,051 million (7% increase from 2023)
- Operating profit: Rs. 6,835 million (12% increase)
- Profit after tax: Rs. 2,203 million (46 basis points increase)
- Earnings per share: Rs. 2.87 (compared to Rs. 1.97 in 2023)
The dairy segment grew by 6.4%, while frozen desserts saw a 13% increase.
Threats to the Dairy Industry
The company stated that the tax makes it difficult to invest in the dairy sector. The emerging dairy export industry, which had been growing steadily, now faces serious challenges. The additional tax burden increases costs and makes Pakistani dairy products less competitive in global markets.
Future Outlook and Government Collaboration
In 2016, Royal FrieslandCampina made one of the largest foreign direct investments in Pakistan’s dairy sector, amounting to $450 million. Since then, the company has worked to improve nutrition access and farmer livelihoods. However, the continued taxation on packaged milk threatens future investment.
FCEPL is actively engaging with the government to seek solutions. The company is advocating for a taxation policy aligned with global practices. In many developing and developed countries, milk products are either tax-free or subject to lower tax rates.
Call for Policy Reforms
FCEPL stressed that policy changes are necessary to:
- Promote safe and nutritious milk consumption
- Support farmer livelihoods through continued investment
- Strengthen Pakistan’s dairy industry in international markets
The company hopes for a favorable resolution to ensure a sustainable future for the packaged dairy sector.
Follow us on Google News, Instagram, YouTube, Facebook,Whats App, and TikTok for latest updates
