Analysts' Briefing 2017

17 Pages·2017·1.46 MB·English

Fauji Foods Limited
Analysts’ Briefing
Syed Aamir Ahsan – CFO
07th February, 2018
P F
RESENTATION LOW
• Dairy Industry of Pakistan
• Business Review of Fauji Foods Limited
• Outlook
Dairy Sector of Pakistan
G D M
LOBAL AIRY ARKET
Country World Production Share
Global dairy market stats
• Global milk production estimated at more than 800 billion
Europe* 20.0%
liters in 2016
India 19.6%
• Around 9% of total milk produced is traded globally in the
United States 11.8%
form ofprocessed products
• More than half of the traded milk is imported by Asian Pakistan 6.5%**
countries China 5.0%
Brazil 4.0%
Pakistan’s standing in global market
Russia 3.7%
• Pakistan is producing 6.5% of total world dairy production.
New Zealand 2.6%
• Despite high production, Pakistan’s share in global export is
Turkey 2.4%
negligible
• Pakistan ranked amongst high milk consuming countries Mexico 1.4%
(greater than 150 kg/capita/year consumption) Ukraine 1.3%
• Opportunity for improvement in animal productivity and
Others 21.7%
mechanization
Total 100%
*Individual country figures are not available
** Share based on FAO production estimate which is higher than GoP’sestimate
Sources: FAO Food Outlook (2017)
G O I T L D S
ROWTH PPORTUNITY N HE OCAL AIRY ECTOR
Total milk production: 45 bn. liters Total tradable milk: 26 bn. liters
Opportunity for
conversion to
processed milk
Less than 10% of the total
milk production
Source: FFL research. Conversion percentages based on last years’ data
L D S
OCAL AIRY ECTOR
Industry – Volume Composition of Major
Industry overview
Products*
• Liquid tea creamer and plain white UHT milk lead the
dairy category
45%
• Price competition among top ranked players in the plain
white milk category
• Price reductions and higher trade margins in Liquid tea 35%
creamer
• All players remained cautious in terms ofprice increases
Recent challenges & issues
• Government policies, labelling issues and negative
propaganda against packaged milk constrained dairy
industry growth
9%
• Notices by tax authorities for paying sales tax on tea 6%
4%
whitener, categorizing it as non-milk product
• Fluctuating preference of customers for cheaper price
Liquid Tea Plain White Dairy Liquid Pasteurized Flav. Milk
loose milk also led to unstable industry growth
Creamer UHT Milk Milk
* Indicative figures
P C
ORTFOLIO OMPARISON
Category Product Fauji Foods Engro Foods Nestle Shakarganj Haleeb
Butter     
Cheese     
Chilled
Pasteurized     
Yogurt     
UHT Milk     
Tea Creamer     
Ambient
Flavoured Milk     
Cream     
Juices Juices & Fruit Drinks     
Jams Jams     
Dry Dry Milk     
Other Ice Cream     
Fauji Foods portfolio - most extensive in terms of product offering
P W M C
LAIN HITE ILK ATEGORY
Plain White Milk Industry (000 Litres)
8%
8% 15%
-5% -12% -2%
-4% -7%
1,203
1,128 1,071 1,028 1,115 1,058 983 1,130 1,108
Plain white milk
Dec '15 Mar '16 Jun '16 Sep '16 Dec '16 Mar '17 Jun '17 Sep '17 Dec '17
• Plain white milk industry declined by 3%
in 2017 (comparing 2016) FFL -Plain White Milk Market Share
4.0%
• Category dominated by Nestle and
3.5%
3.2%
EFoods, however, FFL closely competing
with the third ranked player in category 2.6%
2.5%
(Shakarganj)
Dec 16 Mar 17 Jun 17 Sep 17 Dec 17
L T C C
IQUID EA REAMER ATEGORY
Liquid Tea Creamer Industry (000 Litres)
19%
61%
-20%
-31%
1,334 1,413
1,191
1,066
741
Liquid tea creamer
Dec '16 Mar '17 Jun '17 Sep '17 Dec '17
• Liquid tea creamer industry declined by
FFL –Liquid Tea Creamer Market Share
19% in 2017 (comparing 2016). However,
last quarters 2017 saw bounce back
25.4%
20.1% 19.8%
• FFL closely competing with the top ranked 19.3%
player (Shakarganj) in the category
13.0%
Dec 16 Mar 17 Jun 17 Sep 17 Dec 17
Business Review of Fauji Foods Limited