REG - Edita Food Ind SAE - Edita announces 1H2022 Results

Edita Food Industries SAEAnnouncement

15/08/2022 16:45

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RNS Number : 0732W  Edita Food Industries S.A.E.  15 August 2022

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Cairo, 15 August 2022

Edita Food Industries Reports 2Q2022/1H2022Earnings

Edita more than doubled its profit year-on-year to record EGP 196.0 million in
2Q2022 with a vastly improved margin of 12.5%. Keeping the momentum going from
1Q2022, the company overcame a challenging operating environment to deliver
record-breaking results with over EGP 1.5 billion in revenues.

 

Highlights of 2Q2022

Summary Income Statement (EGP mn)

 EGP mn        2Q2022     2Q2021   Change  1H2022   1H2021   Change
 Revenue        1,573.2   1,150.8  36.7%   3,132.1  2,317.1  35.2%
 Gross Profit  518.7      340.4    52.4%   1,075.4  739.6    45.4%
 % Margin      33.0%      29.6%            34.3%    31.9%
 EBITDA        281.1      163.1    72.4%   574.5    342.5    67.7%
 % Margin      17.9%      14.2%            18.3%    14.8%
 Net Profit    196.0      82.9     136.5%  344.1    164.5    109.1%
 % Margin      12.5%      7.2%             11.0%    7.1%

The discussion and analysis in this report are based on the IFRS statements.
For comparison of the results to Egyptian Accounting Standards, please refer
to the section "Egyptian Accounting Standards Reconciliation to IFRS."

 

Results in a Nutshell

Edita Food Industries S.A.E. (EFID.CA on the Egyptian Exchange & EFID.L on
the London Stock Exchange), a leader in the Egyptian packaged snack food
market, announced today its results for the second quarter ended 30 June 2022,
recording revenues of EGP 1,573.2 million, a 36.7% y-o-y increase. During the
second quarter, profitability improved substantially as reflected on gross
profit and net profit results. Edita saw a 52.4% y-o-y gross profit expansion
to EGP 518.7 million while net profit recorded EGP 196.0 million in 2Q2022, up
an impressive 136.5% y-o-y with a net profit margin of 12.5% compared to 7.2%
in the same quarter last year.

 

On a six-month basis, Edita recorded revenues of EGP 3,132.1 million in
1H2022, up a strong 35.2% compared to the first half of last year. Strong
top-line growth filtered down to the company's bottom-line which expanded an
impressive 109.1% y-o-y in 1H2022 to EGP 344.1 million with an associated
margin of 11.0% for the period versus the 7.1% reported in 1H2021.

 

Having responsively repriced its product portfolio in 4Q2021 and 1Q2022, the
company was able to successfully push ahead and deliver strong results despite
the prevalent inflationary environment driven by rising commodity prices and
exacerbated by the weakening of the Egyptian pound. In 2Q2022, average price
per pack reached EGP 2.11, up 17.9% y-o-y, on the back of direct and indirect
price increases to ease the pressure on profitability margins. In terms of
volumes, Edita recorded a 15.9% y-o-y increase in total packs sold to 746.2
million, with the cakes driving volume growth during the quarter and
outweighing volume decreases mainly in bakery and wafers. In 1H2022, average
price per pack increased 16.8% y-o-y to EGP 2.07 and total packs sold reached
1,515.8 million, up 15.8% compared to 1H2021.

 

Gross profit reached EGP 518.7 million in 2Q2022, up 52.4% y-o-y, yielding a
gross profit margin of 33.0% versus the 29.6% recorded last year. The company
delivered an improved gross profit margin despite a 34.4% y-o-y increase in
direct material costs. Manufacturing overheads (MOH) declined to 11.1% as a
percentage of sales in 2Q2022 compared to 12.8% in 2Q2021 on the back of
economies of scale and further efficiencies. On a year-to-date basis, gross
profit recorded EGP 1.1 billion, up by 45.4% compared to 1H2021. Meanwhile,
gross profit margin recovered to reach 34.3% in 1H2022 compared to 31.9% last
year.

 

Total SG&A for 2Q2022 stood at EGP 280.4 million, a 23.9% y-o-y increase;
however, SG&A as a percentage of sales declined to 17.8% compared to 19.7%
in the second quarter of last year. This was primarily due to a decline in
selling and distribution expenses as a percentage of sales and higher
operating leverage. In 1H2022, total SG&A recorded EGP 573.2 million which
accounted for 18.3% as a percentage of sales versus 20.8% in 1H2021.

 

EBITDA for the quarter recorded EGP 281.1 million, up 72.4% y-o-y, with an
EBITDA margin of 17.9% compared to 14.2% in 2Q2021. Improved EBITDA was
supported by SG&A efficiency and a high operating leverage. On a six-month
basis, EBITDA rose by 67.7% y-o-y in 1H2022 to reach EGP 574.5 million,
yielding an EBITDA margin of 18.3% for the period.

 

Net profit for the quarter grew an impressive 136.5% y-o-y to EGP 196.0
million, with an improved net profit margin of 12.5% versus 7.2% for 2Q2021,
supported by strong performance down the income statement. Edita Morocco was
consolidated starting May 2022 resulting in EGP 30.9 million in gains from
associates for the quarter. Moreover, a gain on the sale of fixed assets of
EGP 7.5 million was realized in 2Q2022. On a year-to-date basis, net profit
grew by 109.1% y-o-y to record EGP 344.1 million with an associated net profit
margin of 11.0% compared to 7.1% in 1H2021.

 

In 2Q2022, gross export sales recorded EGP 101.5 million, up 75.1% y-o-y and
contributing 6.5% to total revenues during the quarter compared to 5.0% in
2Q2021.

 

On the regional front, Edita Morocco has completed its second full quarter of
operations. In 2Q2022, Edita Morocco recorded EGP 31.6 million in revenues,
bringing the total amount in the first half of the year to EGP 51.6 million.
In 2Q2022, total packs sold in Morocco reached 16 million. The facility marks
a key milestone in Edita's regional expansion strategy and enables the company
to strengthen its presence in the attractive Moroccan market.

 

Operational Developments

In the first half of 2022, Edita introduced several differentiated products
that cater to consumer evolving tastes. In January, the company launched its
latest wafer product, Freska Choco Sticks, a rolled wafer with chocolate
coating and chocolate hazelnut filling, retailing at EGP 3.0 per pack under
the Freska brand. This was later followed in February by the launch of Oniro
LAVA at the biscuit segment, a filled biscuit with cocoa hazelnut cream
offered in vanilla and chocolate flavours and retailing at a competitive EGP
3.0 per pack. In February, the rebranding of its Molto Sandwich line of baked
snacks was announced. Reintroduced as Molto Fino, the filled sandwich product
is offered in eight flavours, which expands the company's portfolio in the
savoury subsegment of Egypt's bakery market. Both product launches were
supported by dedicated marketing and advertisement campaigns featuring
top-class celebrities and were very successful in driving demand for the new
products.

 

In order to mitigate the impacts of global inflationary pressures and
persistently rising commodity prices as well as to protect profitability,
Edita implemented two rounds of direct price increases and product
reconfigurations. The first took place in 4Q2021 and saw bakery products
previously priced at EGP 2.0 per pack repriced at EGP 3.0 per pack and those
priced at EGP 3.0 per pack move up to EGP 4.0 per pack. The second round of
direct price increases was put into effect in 1Q2022 and applied to the bakery
and wafer segments. Bakery products previously priced at EGP 4.0 per pack were
repriced at EGP 5.0 per pack, while those priced at EGP 5.0 per pack were
repriced at EGP 7.0 per pack. Meanwhile, wafer bar products under the Freska
label priced at EGP 2.0 per pack have been repriced at EGP 3.0 per pack. In
2Q2022, at the rusks segment consumers migrated to the EGP 3.0 price point and
products priced at EGP 2.0 per pack were delisted. Additionally, indirect
price increases were introduced at the cakes segment through product
downsizing.

 

Overview of Segment Performance

On a segment basis, Edita's impressive consolidated 36.7% y-o-y top-line
growth during the quarter was supported by increased revenues across all six
segments primarily driven by higher prices. The company's cakes segment
continued to account for the largest contribution to consolidated revenue
growth, recording revenues of EGP 789.4 million in 2Q2022, up 65.2% versus
2Q2021. Growth in the cakes segment was supported by an increase of 46.8%
y-o-y in packs sold coupled with a 12.5% y-o-y increase in the average price
per pack. At the bakery segment, revenue grew by 14.8% y-o-y in 2Q2022 to EGP
507.3 million on the back of a 44.5% y-o-y increase in the average price per
pack, which mitigated the 20.5% y-o-y decline in volumes sold. Revenue from
the wafers segment recorded EGP 143.8 million during the quarter, up 11.0%
y-o-y, as average price per pack increased 24.8% y-o-y offsetting an 11.0%
y-o-y drop in packs sold. Meanwhile, the rusks segment continued to perform
well in the second quarter of the year, recording a 33.7% y-o-y increase in
revenues to EGP 85.4 million in 2Q2022. The results were driven by a 35.0%
y-o-y increase in average price per pack as volumes dropped a marginal 1.0%
y-o-y. Revenue in the candy segment expanded 10.4% y-o-y in 2Q2022. Finally,
the biscuits segment saw its top-line expand substantially by 224.1% y-o-y
recording EGP 9.4 million during the quarter as volumes grew 170.9% y-o-y and
average price per pack increased 19.6% y-o-y.

 

Consolidated gross profit for the second quarter of the year rose 52.4% y-o-y
to reach EGP 518.7 million with year-on-year gross profit growth recorded
across all segments despite the persistence of inflationary pressures on
account of global supply chain disruptions and rising commodity prices during
the previous quarters.

 

The cakes segment recorded a year-on-year gross profit growth of 57.2% in
2Q2022 with a gross profit of EGP 246.0 million and a GPM of 31.2% compared to
32.7% in 2Q2021. Edita did not impose any direct price increases in the
segment and is sustaining profitability through product downsizing. At the
bakery segment, gross profit expanded 48.6% y-o-y to reach EGP 189.8 million
in 2Q2022, with an impressive GPM recovery of 37.4% against the 28.9% recorded
one year previously. These results were achieved through direct price
increases, which reflected positively on margins. The company's wafers segment
recorded a year-on-year gross profit growth of 54.5% in 2Q2022 with a gross
profit of EGP 50.9 million and a GPM of 35.4% compared to 25.4% last year, due
to the introduction of direct price increases. At the rusks segment gross
profit expanded by 24.6% y-o-y to reach EGP 22.6 million for the quarter, with
a GPM of 26.4% versus 28.4% in 2Q2021. Meanwhile, the candy segment posted a
year-on-year gross profit growth of 55.7% in 2Q2022, with a GPM of 21.1%
compared to 14.9% in 2Q2021. Finally, Edita's biscuits segment recorded a
gross profit of EGP 1.5 million with a GPM of 16.3% during the quarter
compared to the loss recorded last year.

 

Revenue and Gross Profitability by Segment

 EGP mn               2Q2022   2Q2021   Change   1H2022   1H2021   Change
 Cakes
 Revenue              789.4    477.9    65.2%    1,493.5  979.1    52.5%
 Gross Profit         246.0    156.5    57.2%    510.6    342.9    48.9%
 Gross Profit Margin  31.2%    32.7%    -1.5pts  34.2%    35.0%    -0.8pts
 Bakery
 Revenue              507.3    441.8    14.8%    967.6    845.6    14.4%
 Gross Profit         189.8    127.7    48.6%    352.0    264.0    33.3%
 Gross Profit Margin  37.4%    28.9%    8.5pts   36.4%    31.2%    5.2pts
 Wafers
 Revenue              143.8    129.5    11.0%    386.8    280.8    37.8%
 Gross Profit         50.9     32.9     54.5%    135.7    82.9     63.7%
 Gross Profit Margin  35.4%    25.4%    10.0pts  35.1%    29.5%    5.6pts
 Rusks
 Revenue              85.4     63.9     33.7%    178.3    125.2    42.4%
 Gross Profit         22.6     18.1     24.6%    53.6     36.7     46.2%
 Gross Profit Margin  26.4%    28.4%    -2.0pts  30.1%    29.3%    0.8pts
 Candy
 Revenue              38.1     34.5     10.4%    82.4     74.1     11.1%
 Gross Profit         8.0      5.2      55.7%    17.5     11.4     53.9%
 Gross Profit Margin  21.1%    14.9%    6.2pts   21.2%    15.3%    5.9pts
 Biscuits
 Revenue              9.4      2.9      224.1%   23.6     11.6     102.4%
 Gross Profit         1.5      (0.2)    -        6.1      1.4      331.3%
 Gross Profit Margin  16.3%    -6.3%    22.6pts  25.7%    12.1%    13.6pts
 Total Revenues*      1,573.2  1,150.8  36.7%    3,132.1  2,317.1  35.2%
 Total Gross Profit*  518.7    340.4    52.4%    1,075.4  739.6    45.4%
 Total GPM            33.0%    29.6%    3.4pts   34.3%    31.9%    2.4pts

*Includes contributions from Edita's imports segment

 

 

 

Segment Volumes and Prices

 EGP mn                2Q2022  2Q2021  Change  1H2022  1H2021  Change
 Cakes
 Packs (mn)            488     333     46.8%   921     678     35.9%
 Tons (000s)           14.3    12.7    12.4%   28.0    26.1    7.1%
 Av. Price (EGP)       1.62    1.44    12.5%   1.62    1.44    12.2%
 Bakery
 Packs (mn)            149     187     -20.5%  298     364     -18.3%
 Tons (000s)           8.7     11.0    -20.4%  17.9    21.2    -15.7%
 Av. Price (EGP)       3.41    2.36    44.5%   3.25    2.32    40.0%
 Wafers
 Packs (mn)            65      73      -11.0%  197     161     22.1%
 Tons (000s)           1.5     2.1     -26.9%  4.5     4.6     -0.6%
 Av. Price (EGP)       2.23    1.78    24.8%   1.97    1.74    12.8%
 Rusks
 Packs (mn)            34      34      -1.0%   75      66      13.9%
 Tons (000s)           1.4     1.4     3.6%    3.0     2.7     12.4%
 Av. Price (EGP)       2.55    1.89    35.0%   2.37    1.90    25.0%
 Candy
 Packs (mn)            7       16      -55.0%  15      34      -55.9%
 Tons (000s)           0.7     0.8     -12.3%  1.5     1.7     -9.7%
 Av. Price (EGP)       5.28    2.15    145.6%  5.44    2.16    151.8%
 Biscuits
 Packs (mn)            4       1.5     170.9%  10      6       67.7%
 Tons (000s)           0.2     0.0     329.7%  0.4     0.1     164.8%
 Av. Price (EGP)       2.37    1.98    19.6%   2.41    2.00    20.6%
 Total Packs* (mn)     746     644     15.9%   1,516   1,309   15.8%
 Total Tons* (000s)    26.8    27.9    -4.1%   55.3    56.4    -1.9%
 Av. Price/Pack (EGP)  2.11    1.79    17.9%   2.07    1.77    16.8%

*Includes contributions from Edita's imports segment

 

Balance Sheet

The company's total loans and borrowings as at 30 June 2022 stood at EGP
1,390.9 million, up from EGP 1,195.2 million as at year-end 2021. Total bank
overdrafts recorded EGP 430.4 million as at 30 June 2022 versus EGP 400.7
million at year-end 2021. Cash balance stood at EGP 1.1 billion as at 30 June
2022 versus EGP 1.0 billion at year-end 2021. Edita recorded EGP 339.2 million
in net debt as at 30 June 2022 compared to EGP 189.3 million in net debt at
year-end 2021.

 

Total CAPEX for the period ending 30 June 2022 was EGP 98.6 million including
IT, expansion, maintenance and motor vehicle expenses.

 

Egyptian Accounting Standards Reconciliation to IFRS

Edita's EAS and IFRS financial statements differ in the treatment of
employees' profit share, which is expensed under the IFRS, while the EAS
accounts for them as a distribution and are thus not included on the income
statement. Also, EAS and IFRS differ in the calculation of EBITDA. In 2Q2022,
EGP 2.7 million in FX gain and EGP 7.5 million related to gains on the sale of
fixed assets were deducted from EBITDA. Moreover, a profit share deduction of
EGP 32.6 million was made, bringing total EAS to IFRS adjustments on EBITDA to
EGP 37.4 million. A reconciliation between Edita's financial statements in EAS
with the IFRS-based financial statements for 1H2022 is provided in the table
below.

 

 in EGP mn*                        1H2022 EAS  Adjustment  1H2022 IFRS
 Net Sales                         3,132.1                 3,132.1
 COGS (excluding MOH)              1,652.3                 1,652.3
 MOH                               326.9       (13.8)      340.8
 Total                             1,979.2     (13.8)      1,993.1
 Gross Profit                      1,089.2     13.8        1,075.4
 Gross Profit Margin               34.8%                   34.3%
 Selling & Distribution Exp.       205.0       (10.8)      215.8
 Advertising & Marketing Exp.      168.0                   168.0
 General & Admin. Exp.             181.5       (7.9)       189.4
 Other Operational Exp.            40.8        1.4         39.4
 Profit from Operations            492.8       31.2        461.6
 Profit from Operations Margin     15.7%                   14.7%
 Lease Finance Interest            4.4         (0.5)       4.9
 Profit Before Income Tax          489.2       30.9        458.3
 Income Tax Expense                114.3       0.1         114.2
 Net Profit After Tax              374.9       30.8        344.1
 Net Profit After Tax Margin       12.0%                   11.0%
 EBITDA                            612.0       37.4        574.5
 EBITDA Margin                     19.5%                   18.3%

*Figures are based on management accounts for better disclosure on expenses
breakdown

 

-Ends-

About Edita Food Industries

Edita, founded in 1996 and headquartered in Egypt, is a leader in the growing
Egyptian packaged snack food market. The Company manufactures, markets and
distributes a range of branded baked snack products including packaged cakes,
bakery, rusks (baked wheat), wafers and biscuits as well as selected
confectionary/candy products. The Company's local brand portfolio includes
household names such as Todo, Molto, Bake Rolz, Bake Stix, Freska, Oniro and
MiMix. The Company also has the exclusive ownership of the international
Hostess brands Twinkies, Hoho's and Tiger Tail in Egypt, Libya, Jordan,
Palestine, Morocco, Algeria, Tunisia, Syria, Lebanon, Iraq, Bahrain, Oman, the
UAE, Kuwait, Qatar and Saudi Arabia; and is party to a technical assistance
and know-how agreement to manufacture 11 additional Hostess brands across its
territories. The Company holds strong number-one market positions in its core
cake and bakery segments as well as in rusks, a leading market position in
candy and a growing market position in the wafers segment. In 2Q2022, the
Company derived 93.5% of its revenue from Egypt and 6.5% from regional export
markets. Learn more at ir.edita.com.eg

 

Contacts

Ms. Menna Shams El Din

Head of Investor Relations & Corporate Affairs

T: +202 3851-6464 | menna.shamseldin@edita.com.eg

 

Ms. Alia Balbaa

Investor Relations Manager

T: +202 3851-6464 | alia.balbaa@edita.com.eg

 

Forward Looking Statements

This communication contains certain forward-looking statements. A
forward-looking statement is any statement that does not relate to historical
facts and events, and can be identified by the use of such words and phrases
as "according to estimates", "aims", "anticipates", "assumes", "believes",
"could", "estimates", "expects", "forecasts", "intends", "is of the opinion",
"may", "plans", "potential", "predicts", "projects", "should", "to the
knowledge of", "will", "would" or, in each case their negatives or other
similar expressions, which are intended to identify a statement as
forward-looking. This applies, in particular, to statements containing
information on future financial results, plans, or expectations regarding
business and management, future growth or profitability and general economic
and regulatory conditions and other matters affecting the Company.

 

Forward-looking statements reflect the current views of the Company's
management ("Management") on future events, which are based on the assumptions
of the Management and involve known and unknown risks, uncertainties and other
factors that may cause the Company's actual results, performance or
achievements to be materially different from any future results, performance
or achievements expressed or implied by these forward-looking statements. The
occurrence or non-occurrence of an assumption could cause the Company's actual
financial condition and results of operations to differ materially from, or
fail to meet expectations expressed or implied by, such forward-looking
statements.

 

The Company's business is subject to a number of risks and uncertainties that
could also cause a forward-looking statement, estimate or prediction to differ
materially from those expressed or implied by the forward-looking statements
contained in this prospectus. The information, opinions and forward-looking
statements contained in this communication speak only as at its date and are
subject to change without notice. The Company does not undertake any
obligation to review, update, confirm or to release publicly any revisions to
any forward-looking statements to reflect events that occur or circumstances
that arise in relation to the content of this communication.

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