Taxes Eat Away at FrieslandCampina’s Growth
FrieslandCampina Engro Pakistan Ltd. (FCEPL) faced a major setback in the first half of 2025 as an unusually heavy tax burden eroded its profitability. The company reported a staggering 67% effective tax rate in 2025, largely due to a Supreme Court ruling in May 2025 that required settlement of earlier obligations.
While management clarified that this impact is a one-off event and will not affect upcoming quarters, the numbers left an optical dent: an otherwise improving operating performance looked weak when profits were measured post-tax.
Packaged Dairy Segment Hit Hard
The government’s taxation policies continued to disadvantage packaged dairy products compared to unpackaged milk, creating further hurdles for growth. The packaged dairy segment, which had shown resilience in past quarters, saw its progress dampened by this fiscal pressure.
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Performance Snapshot: 2024 vs 2025
| Metric | 2024 (Full Year) | 2025 (Latest) | Change/Impact |
| Net Sales | +7% | -4% (Q2) | Sales momentum slowed |
| Gross Profit | +11% | Improving | Operating gains intact |
| Operating Profit | +23% | Stronger | Solid efficiency gains |
| EBITDA | +20% | Stable | Healthy core earnings |
| Profit Before Tax | +20% | Higher | Growth visible |
| Effective Tax Rate | Normal (~30%) | 67% | One-off levy impact |
| After-Tax Profit | +46% | Slump | Taxes wiped gains |
| EPS | PKR 2.9 | PKR 0.3 (Q2) | Down from PKR 0.8 YoY |
| Dividend | PKR 2.8/share | N/A (yet) | Awaiting clarity |
The Bigger Picture
The data shows that FCEPL’s growth momentum remained intact, but taxes wiped out the rebound. The company insists that the extraordinary tax hit is temporary, but the immediate impact on investor sentiment and reported earnings is undeniable.
For broader insights on global dairy taxation and competitiveness, see the OECD’s Food and Agriculture Outlook.
The Final Thought
FrieslandCampina’s performance highlights the critical influence of tax policies on corporate earnings. Despite healthy operations and growth potential, the extraordinary tax burden in 2025 has masked progress, turning what could have been a recovery story into a cautionary tale.