REG - Edita Food Ind SAE - Edita reports 1Q2023 Results
30/05/2023 07:00
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RNS Number : 8925A Edita Food Industries S.A.E. 29 May 2023
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Cairo, 29 May 2023
Edita Food Industries Reports 1Q2023 Earnings
Edita starts off the year with a strong set of results with revenue reaching
EGP 2.8 billion, up 78.3% y-o-y, and net profit increasing 2.5x year-on-year
to EGP 375.4 million with a net profit margin of 13.5%.
Highlights of 1Q2023
Summary Income Statement (EGP mn)
EGP mn 1Q2023 1Q2022 1Q2023
Revenue 2,779.7 1,559.0 2,779.7
Gross Profit 879.7 556.6 879.7
% Margin 31.6% 35.7% 31.6%
EBITDA 527.6 293.4 527.6
% Margin 19.0% 18.8% 19.0%
Net Profit 375.4 148.1 375.4
% Margin 13.5% 9.5% 13.5%
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 quarter ended 31 March 2023,
recording revenue of EGP 2,779.7 million, a 78.3% y-o-y increase.
Profitability continued to improve despite a challenging operating environment
as reflected on gross profit and net profit results. Edita saw a 58.0% y-o-y
gross profit expansion at EGP 879.7 million while net profit recorded EGP
375.4 million in 1Q2023, up an impressive 153.5% y-o-y with an improved net
profit margin of 13.5% compared to 9.5% in the same quarter last year.
Edita's business model has proven its resilience in navigating economic
headwinds, as the company carried over the growth momentum from 2022 into the
new year. The company's agility and quick response to shifting market dynamics
led to an exemplary performance in the first quarter of 2023. Through a series
of strategies and initiatives, Edita's revenue was driven by both higher
prices and volume growth. In 1Q2023, the average price per pack reached EGP
2.69, up 40.8% y-o-y, and average price per ton increased 63.9% y-o-y, driven
by direct and indirect price increases to alleviate the pressure on
profitability margins. Capitalizing on its leading market position and brand
equity, the company maintained strong demand for its products despite the
migration to higher price-points. On the volumes front, Edita saw a 34.4%
y-o-y increase in total packs sold to 1,034.5 million, with cake and bakery
being the primary contributors to volume growth in 1Q2023.
In 1Q2023, gross profit reached EGP 879.7 million, up a significant 58.0%
y-o-y, driven by price increases and manufacturing overheads (MOH)
efficiencies. Gross profit margin was squeezed recording 31.6% in 1Q2023
versus the 35.7% booked last year as the devaluation affected the company's
cost base. In 1Q2023, cost of sales reached EGP 1,619.0 million, doubling
year-on-year, due to significant increases in the cost of direct material
components. MOH declined to 9.0% as a percentage of sales in 1Q2023 compared
to 10.6% in 1Q2022 on the back of economies of scale and further efficiencies.
Total SG&A for 1Q2023 stood at EGP 391.9 million, up 33.9% y-o-y; however,
SG&A as a percentage of total sales declined to 14.1% compared to 18.8% in
the first quarter of last year due to operational leverage.
EBITDA for the quarter recorded EGP 527.6 million, up 79.8% y-o-y, with a
stable EBITDA margin of 19.0% compared to 18.8% in 1Q2022. Improved EBITDA was
supported by SG&A efficiency and a high operating leverage.
In 1Q2023, net profit grew an impressive 153.5% y-o-y to EGP 375.4 million
with an improved net profit margin of 13.5% compared to 9.5% in 1Q2022,
supported by strong performance down the income statement. Edita also
benefitted from a EGP 47.1 million FX gain due to the revaluation of its USD
cash position during the quarter.
Edita recorded gross export sales of EGP 238.0 million, up by a strong 204.0%
y-o-y and contributing 9.0% to total revenues during the quarter compared to
5.0% in 1Q2022. In USD terms, export sales booked USD 7.9 million, up 66.2%
y-o-y.
On the regional front, Edita Morocco recorded EGP 149.5 million in revenue and
sold 48.4 million packs in the first quarter of 2023. As of the end of 1Q2023,
Edita Morocco captured a 11.4% market share and is set to grow further this
year as it capitalizes on the addition of its new Twinkies production line and
expanded capacity.
Operational Developments
Introducing innovative and differentiated products that cater to the evolving
tastes of consumers will continue to be a focal point for the company this
year. In the first weeks of 2023, Edita launched Molto Magnum Mix in three
flavours: chocolate and cream, salted caramel and cream as well as strawberry
cheesecake and cream. The product was offered in two sizes, single serve
croissant and mini croissants, both retailing at EGP 10 per pack. Furthermore,
Edita rolled out Molto XXL Plus, a new variation of the popular Molto XXL with
additional filling. In April, the company launched Oniro Coated Lava, a
chocolate and vanilla biscuit filled with chocolate hazelnut cream and coated
with chocolate. The product is retailing at EGP 5 per pack and is in line with
the company's strategy to continue diversifying its product portfolio.
In March, Edita unveiled its new branding and logo reflecting its accelerated
growth and redefined strategy focusing on product diversity and regional
expansion. The new logo, which has been rolled across the company's products
and marketing material, captures the notion of diversity, growth, teamwork and
the richness of the portfolio.
Edita was able to mitigate the effects of global inflationary pressures and
supply chain disruptions through its long-standing relationships with global
and local suppliers. The company is navigating the challenging operating
environment by implementing a series of initiatives including widening the
price spectrum across the whole portfolio, product reconfiguration, price
adjustments through direct and indirect price increases and migrating
consumers to higher price points.
Overview of Segment Performance
On a segment basis, Edita's consolidated top-line grew 78.3% y-o-y, with
revenue at five of the six segments benefitting from a combination of higher
prices and volumes. The main contributor to consolidated revenue growth was
the cakes segment, which recorded a revenue of EGP 1,512.2 million in 1Q2023,
up 114.8% y-o-y versus 1Q2022. Growth in the cakes segment was supported by a
54.8% y-o-y increase in packs sold coupled with a 38.7% increase in average
price per pack. At the bakery segment, volumes have recovered following
multiple rounds of direct price increases over the past year. Consequently,
revenue grew by 66.7% y-o-y in 1Q2023 to EGP 767.5 million on the back of a
23.0% y-o-y increase in volume sold and a 35.6% y-o-y increase in the average
price per pack. Meanwhile, revenue at the wafers segment grew 19.1% y-o-y to
EGP 289.4 million as the average price per pack increased 31.3% y-o-y
offsetting a 9.3% y-o-y drop in packs sold. Revenue at the rusks segment
expanded 50.2% y-o-y in 1Q2023 to EGP 139.5 million driven by a 43.8% y-o-y
increase in average price per pack and 4.5% y-o-y increase in volume sold.
Revenue in the candy segment grew 39.3% y-o-y to EGP 61.6 million in 1Q2023,
as a 69.7% y-o-y increase in volume sold outweighed the 17.9% y-o-y decrease
in average price per pack. Finally, revenue at the biscuits segment fell 33.0%
y-o-y EGP 9.5 million in 1Q2023 as volume of packs sold decreased by 33.4%
y-o-y and average price per pack remained relatively stable year-on-year.
Consolidated gross profit rose 58.0% y-o-y in 1Q2023 to reach EGP 879.7
million with year-on-year gross profit growth recorded across all segments,
with the exception of biscuits. While gross profit margin was squeezed given
the inflationary environment and elevated cost base, Edita continued to
implement different methodologies to protect its profitability. MOH
efficiencies along with pricing strategies and portfolio optimization helped
mitigate the effect of rising costs.
The cakes segment recorded a year-on-year gross profit growth of 84.7% in
1Q2023 with a gross profit of EGP 488.6 million and a GPM of 32.3% compared to
37.6% in 1Q2022. At the bakery segment, gross profit grew 48.9% y-o-y to EGP
241.4 million in 1Q2023, with a GPM of 31.5% versus 35.2% in 1Q2022.
Meanwhile, the wafers segment saw a year-on-year gross profit expansion of
16.3% in 1Q2023 to EGP 98.6 million with a GPM of 34.1% versus the 34.9%
booked in 1Q2022. The rusks segment recorded a gross profit of EGP 38.6
million, up 24.5% y-o-y, with a GPM of 27.7% versus 33.4% in 1Q2022. Gross
profit in the candy segment reached EGP 12.9 million, up 36.0% y-o-y, with a
GPM of 20.9% compared to 21.4% in 1Q2022. Finally, the biscuits segment's
gross profit declined 110.5% y-o-y to negative EGP 0.5 million with a GPM of
-5.0% versus 32.0% in 1Q2022.
Revenue and Gross Profitability by Segment
EGP mn 1Q2023 1Q2022 Change
Cakes
Revenue 1,512.2 704.0 114.8%
Gross Profit 488.6 264.5 84.7%
Gross Profit Margin 32.3% 37.6% -5.3pts
Bakery
Revenue 767.5 460.4 66.7%
Gross Profit 241.4 162.2 48.9%
Gross Profit Margin 31.5% 35.2% -3.8pts
Wafers
Revenue 289.4 243.1 19.1%
Gross Profit 98.6 84.8 16.3%
Gross Profit Margin 34.1% 34.9% -0.8pts
Rusks
Revenue 139.5 92.9 50.2%
Gross Profit 38.6 31.0 24.5%
Gross Profit Margin 27.7% 33.4% -5.7pts
Candy
Revenue 61.6 44.3 39.3%
Gross Profit 12.9 9.5 36.0%
Gross Profit Margin 20.9% 21.4% -0.5pts
Biscuits
Revenue 9.5 14.2 -33.0%
Gross Profit (0.5) 4.5 -
Gross Profit Margin -5.0% 32.0% -37.0pts
Total Revenues* 2,779.7 1,559.0 78.3%
Total Gross Profit* 879.7 556.6 58.0%
Total GPM 31.6% 35.7% -4.1pts
*Includes contributions from Edita's imports segment
Segment Volumes and Prices
EGP 1Q2023 1Q2022 Change
Cakes
Packs (mn) 671 433 54.8%
Tons (000s) 19.4 13.8 41.1%
Av. Price (EGP) 2.26 1.63 38.7%
Bakery
Packs (mn) 183 149 23.0%
Tons (000s) 10.0 9.1 10.6%
Av. Price (EGP) 4.18 3.09 35.6%
Wafers
Packs (mn) 120 132 -9.3%
Tons (000s) 2.6 3.0 -12.5%
Av. Price (EGP) 2.42 1.84 31.3%
Rusks
Packs (mn) 44 42 4.5%
Tons (000s) 1.6 1.6 -1.6%
Av. Price (EGP) 3.20 2.23 43.8%
Candy
Packs (mn) 13 8 69.7%
Tons (000s) 0.9 0.8 7.8%
Av. Price (EGP) 4.59 5.59 -17.9%
Biscuits
Packs (mn) 4 6 -33.4%
Tons (000s) 0.2 0.2 -33.6%
Av. Price (EGP) 2.45 2.43 0.6%
Total Packs* (mn) 1,035 770 34.4%
Total Tons* (000s) 34.8 28.6 21.8%
Av. Price/Pack (EGP) 2.69 1.91 40.8%
*Includes contributions from Edita's imports segment
Balance Sheet
The company's total loans and borrowings as at 31 March 2023 stood at EGP
1,451.9 million, down from EGP 1,496.9 million as at year-end 2022. Total bank
overdrafts recorded EGP 349.9 million as at 31 March 2023 down from EGP 501.7
million at year-end 2022. Cash balance stood at EGP 1.6 billion as at 31 March
2023 versus EGP 1.4 billion at year-end 2022. Edita recorded a net cash
balance of EGP 108.1 million as at 31 March 2023 compared to EGP 107.8 million
in net debt at year-end 2022.
Edita's reported inventories of EGP 1,314.2 million as at 31 March 2023, up
from EGP 981.5 million as at 31 December 2022. Meanwhile, trade receivables
stood at EGP 196.8 million as at 31 March 2023, up from EGP 141.9 million as
at 31 December 2022.
Total CAPEX for the quarter ended 31 March 2023 was EGP 80.6 million including
maintenance and expansion 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 1Q2023,
EGP 47.1 million in FX gain and EGP 0.3 million related to gains on the sale
of fixed assets were deducted from EBITDA. Moreover, a profit share deduction
of EGP 24.9 million was made, bringing total EAS to IFRS adjustments on EBITDA
to EGP 72.3 million. A reconciliation between Edita's financial statements in
EAS with the IFRS-based financial statements for 1Q2023 is provided in the
table below.
in EGP mn* 1Q2023 EAS Adjustment 1Q2023 IFRS
Net Sales 2,779.7 2,779.7
COGS (excluding MOH) 1,619.0 1,619.0
MOH 239.8 (11.3) 251.1
Total 1,858.8 (11.3) 1,870.2
Gross Profit 891.0 11.3 879.7
Gross Profit Margin 32.1% 31.6%
Selling & Distribution Exp. 122.1 (7.6) 129.6
Advertising & Marketing Exp. 100.7 100.7
General & Admin. Exp. 155.5 (6.0) 161.5
Other Operational Exp. 24.9 0.7 24.2
Profit from Operations 487.8 24.3 463.5
Profit from Operations Margin 17.5% 16.7%
Lease Finance Interest 3.9 (0.3) 4.1
Profit Before Income Tax 527.2 24.5 502.7
Income Tax Expense 127.3 127.3
Net Profit After Tax 399.9 24.5 375.4
Net Profit After Tax Margin 14.4% 13.5%
EBITDA 599.9 72.3 527.6
EBITDA Margin 21.6% 19.0%
*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, HOHOs 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 1Q2023, the
Company derived 91.0% of its revenue from Egypt and 9.0% 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
(mailto:menna.shamseldin@edita.com.eg)
Ms. Alia Balbaa
Investor Relations Manager
T: +202 3851-6464 | alia.balbaa@edita.com.eg (mailto:alia.balbaa@edita.com.eg)
Forward Looking Statements
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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
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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
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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
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