INVESTOR’S BRIEFING

October 15, 2019

Avari Hotel Karachi
 ECONOMIC OUTLOOK

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 PAKISTAN ECONOMIC OUTLOOK

- 3.3% GDP Growth in FY 19 – “ A 9 year low”

- FY 20 GDP growth expected at 2.4%
- Macro – imbalances are now taking a toll –
economy undergoing stabilization measures
- Reduced consumer demand due to shrinking
disposable income
- Increase in taxation for individual and corporates

- 12 month avg CPI (Aug 19) clocked at 8.2%

- Year – on – Year CPI Index in Aug ’19 @ 11.6%

- 39% depreciation in PKR vs USD since Mar 18

- 525 bps increase in KIBOR since June 18 (12.81%)

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Source – State Bank of Pakistan website
 NATIONAL FOODS JOURNEY AT A GLANCE

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 FOUNDATION AND EXPANSION

1970 - Founded as a branded spice company

- Company became multi-national with establishment of wholly

2013 owned subsidiary – National Foods DMCC. It was further
expanded to UK and Canada under NF DMCC;

2017 - Company acquired 60% stake in A1 Cash and Carry business in

Canada

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 OUR JOURNEY NOW REACHING 50 YEARS

1970 2020
50 YEARS !

❖ 33 b revenue (USD 200 M)

❖ 11 Categories
❖ Market leader in multiple - categories
❖ 4 Manufacturing Foot prints
❖ 270+ SKUs
❖ 425 Distributors covering 100,000 scheduled outlets (excluding
retail covered through whole-sale distribution)
6 | ❖ Indigenous Center of Excellence / Innovation Center
 VISION, DIRECTION AND VALUES

VISION & MISSION

A Professional Board, Audit
Committee & Human Resource
To be a Rs. 50b food company in the Committee oversee and setting
convenience food segment by launching the direction for the company &
products and services in the domestic
enabling a value - based culture .
and international markets that enhance
life style and create value for our
customers through management
excellence at all levels

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 MANAGEMENT COMMITTEE

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 FROM THE DREAM TO IMPACT AND CONTINUOUSLY MOVING FORWARD

CONSUMER
Consumer – centric decisions
Multiple-category market leaders
ISO certifications | State of the art R&D facility
British Retail Consortium Audit | Grade A
Our Founder’s
philosophy at Corporate Board / Investments in people, IT, Infrastructure
work Code of corporate governance
PEOPLE

What NFL Give back to our Society

SOCIETY

contributes to Agro farmers development

CSR programs with NGOs,
the society MNCs, Adult Literacy programs
beyond taxes
INVESTORS

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 OUR PRODUCT PORTFOLIO

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RECIPE MASALA
Targeted towards the younger generation
of women, whether they are housewives
and working class. This category is
positioned as a ‘convenience product’,
where traditional cooking methods and
age old recipes come in one simple box!
All purpose recipe / Riwayati Salan
INNOVATIONS
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PRODUCT PROFILE
SAUCES
Of our prized categories, competing against
the large players in the market such as: Heinz,
Knorr, Mitchells… We leverage our product
attribute of Tangy taste targeting the teen age
Audience
Chilli Garlic Sauce Reformulation -- Q3
Ketchup Range Packaging Revamp -- Q3
PICKLES
The most mature category by which we are
recognized internationally. Developed
specifically for the Asian taste bud and
positioned towards users who have a tangy and
spicy taste preference!
Garlic Pickle Q1 – 310 gms |
Pickle Pouches Q2 – 500 – 1000 gms|
 PRODUCT PROFILE

SALT DESSERTS SPICES AND INGREDIENTS

A huge market with largely unbranded sector.

Large sector of the category is unbranded
NFL is the market leader in the branded sector
covering

Salt LUP Rs 10 Pack Black Pepper & Garam Masala LUP

INNOVATIONS

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 PRODUCT PROFILE

SAVORY SNACKS JAMS & JELLIES MAYO & SPREADS

▪ New Launch o New Launch
▪ Key players in the market include o Only competitor in the market is Young’s
▪ Frito – Lays (KK & Cheetos)
▪ Local players

Red Chili Flavour – Q1 ‘19 Pineapple | Strawberry | Black Currant - Q1 ‘19 KEYO PROMOTION | GARLIC MAYO
INNOVATIONS

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 PRODUCT PROFILE

CHINESE SNACKS INNOVATION PIPELINE

Chat Masala

Pet Bottles
INNOVATIONS

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 FINANCIALS OVER THE YEARS

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 KEY FINANCIALS OVER THE YEARS

CAGR 10 Yr. 5 Yr. Margins have been effected in the last 4 years
NFL investing in the future :
Net Sales 20% 20%
✓ Canadian market A1 Cash & Carry
Operating Profit* 20% 10% acquisition
PAT 25% 12%
✓ Investing in people / internal capability –
Our assets

✓ Seeding strategic bets for the future

* Excluding finance cost, other charges / income and taxes
(Snacks & Mayo)
GP % improved for local and ID div (32% to 33% and 30% to
36%) whilst A1 (17 to 19%) over the last years ✓ Automation and Capacity Expansions
EBITDA averaged @ 10 % (Last 4 years) vs. prior years @ 14%

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PAT % NSV
EPS @ 124 M shares
6 8.5%
8.1% 8.0%
7.6%
6.0% 5.8%
5.3%
4.8%
4.2%
3.7%
1
1.9%

9 10 11 12 13 14 15 16 17 18 19

PAT reflects profit attributable to the parent company only

16 | PY numbers till 2016 adjusted for IFRS 15 change in Net Sales classification
 KEY FINANCIALS OVER THE YEARS

DIVIDEND YIELD ROE

2.9 39
38
2.2 33
29 28 30
1.6
1.3
1.0 1.0

14 15 16 17 18 19 14 15 16 17 18 19

ROCE

55 56
44 42
37
32

14 15 16 17 18 19

17 | PY numbers till 2016 adjusted for IFRS 15 change in Net Sales classification
 2019 FINANCIAL HIGHLIGHTS

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 MARKETING INITIATIVES
Thematic Out Door Activations

Consumer Promotions

Packaging Roll Out

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 2019 HIGHLIGHTS
% NSV
P&L Rs in M Growth ‘18 ‘19
Revenue 33,334 16%
Net Sales 24,254 16%
Cost of Sales (17,269) 15% 72 71
Gross Profit 6,984 18% 28 29
Distribution Cost (3,921) 17% 16 16
Loss on Trade Debts (33) -69% 1 0
Admin expenses (1,141) 25% 4 5
Other expenses (131) -43% 1 1
Other Income 248 368% 0 1
Operating Profit 2,006 47% 7 8
Finance Cost (283) 44% 1 1
PBT 1,723 47% 6 7
Tax (352) 141% ETR 12% 20%
PAT 1,371 33% 5 6

Note : Numbers restated in both years with IFRS 15 change for comparison purposes
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 2019 HIGHLIGHTS
Revenue (Rs M) Growth

A 1 Cash &
7,803 46 %
Carry

International -
Division
1,618

Local Division 23,915 10 %

Gross Profit 2018 2019

A1 17% 19%

International 30% 36%

Local 32% 33%

PAT 2018 2019

A 1 Cash & Carry 200 1% 3%

International
Division 307 1% 22%

21 | Local Division 877 7% 6%

Note : Numbers restated in both years with IFRS 15 change for comparison purposes
 2019 HIGHLIGHTS

Balance Sheet Rs in M Growth Balance Sheet Rs in M Growth

Non-Current Assets 5,888 13% Equity 5,030 26%
PPE 5,037 11% Share Capital 622 20%
Intangibles & Deposits 851 21% Reserves 4,137 26%
Current Assets 7,395 30% NCI 271 38%
Stock in trade 4,935 34% Non- Current Liabilities 1,297 210%
Trade Debts 1,092 -6% Loans and Leases 971 310%
Cash and Bank 876 133% Deferred Tax 216 93%
Others 492 3% Other Liabilities 111 58%
Others
TOTAL ASSETS 13,283 22% Current Liabilities 6,956 7%
Trade Liabilities 4,093 27%
Contract Liability 147 0%
Short term Borrowing 1,902 -14%
Current maturity 325 -55%
Tax – Net 437 39%
Others 52 47%
Total Liabilities & Equity 13,283 22%
Note : Numbers restated in both years with IFRS 15 change for comparison purposes
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 2019 HIGHLIGHTS
Balance Sheet Unit 2015 2016 2017 2018 2019
Profitability ratios
GP Margin % 35.4 31.5 32.9 28.4 28.8

OP margin % 12.6 9.2 8.7 6.6 8.3

PAT margin % 8.5 6.0 5.9 4.9 5.7
Return on Equity % 39.6 29.9 32.8 27.8 30.3
Return on Capital Employed % 55.9 43.9 42.4 32.2 37.3
Return on Assets % 8.8 12.9 12.1 10.1 11.3
Liquidity / Gearing ratios
Current Ratio ratio 1.5 1.1 1.0 0.9 1.1

Cash Flow from Operations to Sales % 12.1 3.6 8.7 6.3 7.9

Debt to Equity Ratio ratio 0.0 0.0 11.1 9.8 18.5

Interest Coverage times 33.1 15.0 13.6 7.0 7.1
Efficiency ratios
DIO days 108.6 111.6 107.4 86.7 91.1
DSO days 29.2 27.6 25.6 22.1 17.0
DPO days 17.1 13.3 14.0 20.7 25.6
Operating Cycle days 120.7 126.0 119.0 88.1 82.5
Investment ratios
Earnings Per Share Rs. 8.0 6.4 7.7 8.1 10.4
P/E ratio Ratio 35.4 36.5 29.5 32.8 17.7
Cash Dividend Per Share Rs. 10.0 2.8 4.3 3.8 4.0
Stock Dividend Per Share Rs. 0.0 0.0 0.0 1.0 1.0
Market Value Per Share (year end) Rs. 339.7 281.0 271.0 319.0 184.2
Breakup Value Per Share (year end) Rs. 26.9 24.6 32.7 38.6 40.5

Note : Numbers RESTATED in all years WITH IFRS 15 change for comparison purposes
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