FrieslandCampina Engro Pakistan Limited (FCEPL) reported a 16 percent year-on-year increase in operating profit for the year ended December 31, 2025, supported by disciplined cost management and improved commercial execution, even as the dairy sector continues to grapple with the impact of an 18 percent sales tax on packaged milk.
According to the company’s financial results, net sales stood at Rs104.45 billion in 2025, reflecting a 2.4 percent decline compared to Rs107.05 billion in 2024. However, operating profit rose to Rs7.94 billion from Rs6.83 billion last year, while operating margins improved to 7.6 percent of sales, up from 6.4 percent — an expansion of 120 basis points.
Profit after tax climbed 22 percent to Rs2.69 billion, compared with Rs2.20 billion in the previous year. Earnings per share increased to Rs3.51 from Rs2.87.
The company attributed the improved profitability to optimization across procurement, manufacturing, logistics and overheads, while maintaining quality, safety and service standards. Gross margin expanded by 70 basis points during the year.
Sales Tax Challenge Continues
FCEPL reiterated concerns over what it described as an “uneven playing field” created by the implementation of sales tax on packaged UHT milk in 2024. The company noted that loose milk — which constitutes a large portion of Pakistan’s dairy consumption — remains outside the tax net and formal documentation systems.
Industry players argue that the taxation of packaged milk contradicts the government’s broader objectives of improving access to safe and nutritious food, strengthening documented supply chains, and promoting sustainable livelihoods for dairy farmers.
The company said the prevailing tax regime restricts the ability of organized dairy companies to invest in category development, dairy development programmes and long-term farmer productivity initiatives.
Market Share Gains
Despite sectoral challenges, FCEPL said it continued investing behind its brands and focused on customer-centric offerings, resulting in increased market share and an improved volume mix.
The company maintained that sustained efforts in affordability, cost efficiency and supply chain optimization would remain central to its operating model going forward.
Outlook
Looking ahead, FCEPL said it will continue engaging with government stakeholders to advocate for a more balanced taxation framework for packaged dairy, in line with international practices.
The company expressed confidence in building on its business fundamentals by reinforcing consumer trust in the safety and nutritional value of packaged dairy products.
“We remain committed to the highest standards of hygiene, food safety and sustainability, while providing safe, affordable and nourishing dairy products to millions of Pakistanis every day,” the company said in its statement.
