KARACHI (Special Correspondent) – FrieslandCampina Engro Pakistan Limited (FCEPL) has announced a robust financial performance for the third quarter of 2026, reporting a 10.1% revenue growth during the first nine months of the year. The company’s revenue climbed to PKR 88.4 billion from PKR 80.2 billion recorded during the same period in 2025. This growth was driven by a favorable portfolio mix, strategic in-market execution, and targeted brand investments, alongside improved route-to-market fundamentals. Efficiency initiatives within sourcing and manufacturing sectors further supported this expansion, contributing to a 400 basis points (bps) increase in gross margins and a 53.3% rise in operating profit compared to the previous year.

Key Points

• FCEPL achieved a revenue growth of 10.1% for the first nine months of 2026.
• The company reported a 53.3% increase in operating profit compared to last year.
• Gross margins expanded by 400 basis points due to manufacturing and sourcing efficiency.
• An 18% sales tax on UHT milk since July 2024 continues to suppress formal sector sales.

Impact of Taxation on Dairy Markets

The packaged milk segment continues to grapple with an uneven competitive landscape, primarily attributed to the 18% sales tax imposed on UHT (Ultra-High Temperature) milk in July 2024. As loose milk remains outside the tax net, the widening price disparity is negatively affecting sales volumes within the formal dairy industry. The company has maintained active engagement with government stakeholders to advocate for equitable tax policies that align with global benchmarks, highlighting the adverse consequences of the current regime on the documented dairy economy and the livelihoods of local livestock farmers.

Challenges in the Operating Environment

The firm noted that regional conflicts throughout the third quarter of 2026 created sustained headwinds for the operating environment. Escalating freight and energy costs placed consistent pressure on the value chain, inflating input costs for production. Furthermore, domestic inflationary pressures and high policy rates have constrained household purchasing power, impacting the overall affordability and consumer demand for dairy categories. As previously discussed in broader economic contexts such as the SBP policy rate hike, these macroeconomic factors remain a critical concern for industrial growth. Leveraging its 150-year heritage and global expertise, FCEPL reaffirmed its commitment to maintaining high standards of food safety, hygiene, and sustainability while ensuring the delivery of nutritious, affordable dairy products to millions of Pakistanis.

Frequently Asked Questions

What drove the revenue growth for FCEPL in 2026?

Revenue growth was driven by a favorable product portfolio mix, strong in-market execution, selective brand investments, and improvements in route-to-market fundamentals.

How has the UHT milk tax affected the formal dairy sector?

The 18% sales tax on UHT milk has created an uneven playing field, causing a price gap with untaxed loose milk that suppresses sales volumes in the formal dairy sector.