REG - Edita Food Ind SAE - Edita Reports 1Q2024

Edita Food Industries SAEAnnouncement

20/05/2024 16:15

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RNS Number : 1581P  Edita Food Industries S.A.E.  20 May 2024

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Cairo, 20 May 2024

Edita Food Industries Reports 1Q2024 Earnings

Edita starts the new year strongly, approaching the EGP 4 billion mark in
revenues with an impressive 41.3% year-on year growth

 

Highlights of 1Q2024

Summary Income Statement (EGP mn)

 EGP mn        1Q2024   1Q2023   Change
 Revenue       3,927.5  2,779.7  41.3%
 Gross Profit  1,201.6  879.7    36.6%
 % Margin      30.6%    31.6%
 EBITDA        673.1    527.6    27.6%
 % Margin      17.1%    19.0%
 Net Profit    436.4    375.4    16.2%
 % Margin      11.1%    13.5%

The figures displayed are based on unaudited results drawn from management
accounts and finance department numbers(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 2024. The
company saw significant revenue growth, reaching EGP 3,927.5 million and
marking a substantial 41.3% y-o-y increase. This growth was fuelled by a
strong performance across all segments, largely attributed to improved pricing
strategies and volume resilience across the portfolio. Gross profit grew by
36.6% y-o-y to hit EGP 1,201.6 million in 1Q2024, recording a solid margin of
30.6% despite the ongoing increase in raw material prices. EBITDA showed
notable growth, rising by 27.6% y-o-y to EGP 673.1 million, with a margin of
17.1% versus 19.0% last year. Additionally, the bottom-line results reported a
growth of 16.2% y-o-y, generating EGP 436.4 million in the first quarter of
2024, accompanied by a net profit margin of 11.1% versus 13.5% last year.

 

Edita's business model has demonstrated resilience in navigating inflationary
pressures, with its commitment to innovation and operational efficiency
playing a pivotal role in overcoming challenges. In the first quarter of 2024,
revenue experienced strong growth, driven by strategic pricing strategies and
increased sales volumes. While the company's core segment made the largest
contribution to growth, smaller segments such as wafers and candy have also
shown strong growth contribution, especially compared to their performance in
previous quarters. The average price per pack rose by 30.1% y-o-y, reaching
EGP 3.50. Despite this, the number of packs sold increased by 8.6% y-o-y in
1Q2024 with a total of 1.1 billion packs sold, driven primarily by volumes in
the company's smaller, nascent segments. This bears testament to Edita's
ability to effectively balance pricing strategies while maintaining strong
sales performance, thus sustaining its growth trajectory in the competitive
market.

 

Edita's gross profit expanded by 36.6% y-o-y, reaching EGP 1,201.6 million in
1Q2024. Meanwhile, gross profit margin slightly declined to 30.6% versus 31.6%
in the first quarter of 2023, attributed to the rise in the cost of goods sold
(COGS), which increased by 44.1% y-o-y to EGP 2,333.4 million during the
period. The significant increase in COGS, however, was offset by robust
revenues and economies of scale. Consequently, manufacturing overheads (MOH)
remained stable compared to 1Q2023, constituting 9.0% of revenues in 1Q2024.

Total SG&A expenses rose to EGP 574.8 million in 1Q2024, up by 46.7%
y-o-y, mainly due to a 54.9% increase in selling and distribution expenses, a
44.1% y-o-y increase in advertising and marketing expenses, as well as a 41.7%
increase in general and administrative expenses. As a result, the SG&A to
sales ratio slightly increased to 14.6%, up from 14.1% previously, due to the
company's ongoing expansion efforts. In 1Q2024 alone, Edita added 150 vehicles
and expanded its sales force by 230 people.

 

EBITDA recorded EGP 673.1 million in 1Q2024, representing an increase of 27.6%
y-o-y increase, while the EBITDA margin was down to 17.1% versus 19.0% in this
quarter, last year.

 

Net profit generated EGP 436.4 million, up 16.2% y-o-y with an associated
profit margin of 11.1% versus 13.5% in 1Q2023.

 

During the period, gross export sales grew 12.7% y-o-y to record EGP 268
million, contributing 6.8% of gross sales. In USD, the export sales amounted
to USD 7.1 million in 1Q2024.

 

On the regional front, Edita Morocco recorded EGP 80.7 million in the first
quarter of 2024.

 

Operational Developments

Edita continued to adapt and optimize its portfolio in response to the
challenges posed by inflationary pressures and currency devaluations by
focusing on diversifying its product range and size, while expanding its price
spectrum. This strategy has proven instrumental in maintaining profitability
and has further built upon the groundwork laid in 2023 of diversifying the
portfolio to overcome the challenging environment.

 

In May 2023, in line with its strategy, the company ventured into Egypt's
untapped frozen food segment by acquiring 'Fancy Foods'. This investment
comprised a complete acquisition of assets, including two full production
lines, additional machinery, land, factory, and a distribution arm. After the
acquisition, it swiftly upgraded the acquired assets to meet its quality
standards and initiated operations under its subsidiary, Edita Frozen Food
Industries with the launch of Molto Forni.

 

While the initial offerings included puff pastry and croissants, Edita has
remained steadfast in rapidly expanding its product range within this segment,
where new additions such as pizzas and sweet pies have been quickly introduced
in 1Q2024. Since this segment offers a different type of product, all frozen
items are priced at higher points, ranging from EGP 30 to EGP 225.

 

To support the distribution of its many new releases, the company is
consistently expanding its distribution channels both locally and globally.
Currently, it boasts 1,078 fleets, up from 920 last quarter, and operates 26
distribution centers, including a newly added specialized center for frozen
products. Through these efforts, Edita facilitates the launch of its new
products and ensures ample capacity for future growth, ultimately maximizing
market penetration and enhancing brand loyalty.

Moreover, the company has recently finalized a long-term loan agreement with
Banque Misr, securing EGP 990 million over an 8-year tenure. This financing
will facilitate the expansion of more production lines within Egypt. A portion
of the loan has already been allocated to the installation of a new bakery
line, set to enhance production capabilities significantly. Currently under
installation, it is to be housed at Edita's existing E08 facility and is
expected to become operational in the third quarter of 2024.

 

Moreover, the company has recently finalized a long-term loan agreement with
Banque Misr, securing EGP 990 million over an 8-year tenure. This financing
will facilitate the expansion of more production lines within Egypt. A portion
of the loan has already been allocated to the installation of a new bakery
line, set to enhance production capabilities significantly. Currently under
installation, it is to be housed at Edita's existing E08 facility and is
expected to become operational in the third quarter of 2024.

 

On the digitalization front, Edita's subsidiary, Edita Trade and Distribution,
partnered with Fawry, the leading provider of e-payment services in Egypt, to
enable cashless transactions at Edita's points of sale. This partnership will
see the implementation of Fawry's fintech solutions, which aim to
revolutionize Edita's cash management processes, facilitate cashless
collections by its sales representatives, enhance financial transactions, and
ultimately improve Edita's operational efficiency.

 

Overview of Segment Performance

In 1Q2024, Edita's total revenue amounted to EGP 3.9 billion, representing a
41.3% y-o-y increase driven by revenue growth across all segments. The cake
segment was the primary contributor to growth during the quarter, achieving
revenues of EGP 2,012.5 million, up 33.1% y-o-y. This growth was fueled by a
29.4% y-o-y rise in the average price per pack and a 2.8% y-o-y increase in
the number of packs sold. In the bakery segment, revenues grew by 37.8% y-o-y
to reach EGP 1,057.7 million in 1Q2024, driven by a 30.6% y-o-y increase in
the average price per pack and a 5.5% rise in packs sold. During the same
period, the wafers segment generated revenues of EGP 492.9 million, marking a
remarkable 70.3% y-o-y increase, fueled by a substantial 44.6% rise in packs
sold and a 17.8% increase in the average price per pack compared to 1Q2023. In
the rusks segment, revenues grew 18.5% y-o-y to EGP 165.4 million in 1Q2024,
attributable to a 52.8% y-o-y increase in the average price per pack, which
outweighed a 22.4% y-o-y decrease in the number of packs sold. The candy
segment demonstrated strong performance during the quarter, with revenue
increasing by 121.8% y-o-y to EGP 136.7 million. This growth was supported by
a notable 69.5% y-o-y increase in the number of packs sold and a 30.8% y-o-y
rise in the average price per pack. For biscuits, revenue at the segment hit
EGP 39.4 million, representing a three-fold increase, driven by a 157.2% y-o-y
rise in the number of packs sold and a 61.2% increase in the average price per
pack. In the new frozen segment, Edita generated EGP 22.9 million in revenue
in the first quarter of 2024, following the introduction of its inaugural line
under the Molto Forni brand in October 2023.

 

Edita's consolidated gross profit grew by 36.6% y-o-y to EGP 1,201.6 million,
with year-on-year gross profit growth recorded across all segments except for
rusks and the new frozen segment. Strong revenue growth, coupled with
operational efficiency, effectively mitigated the impact of increased direct
material costs.

 

Breaking down the segments, the cakes segment recorded a robust 45.8% y-o-y
growth in gross profit to EGP 712.3 million in 1Q2024, with an expanded gross
profit margin(GPM) of 35.4% compared to 32.3% in 1Q2023. Meanwhile, the bakery
segment recorded a marginal increase in gross profit to EGP 243.8 million in
1Q2024, with a contracted GPM of 23.0% compared to 31.5% in 1Q2023. The wafers
segment grew a solid 62.0% y-o-y to record a gross profit of EGP 159.7
million, with a GPM of 32.4% versus 34.1% in 1Q2023 . At the rusks segment,
gross profit dropped slightly by 1.8% y-o-y to EGP 37.9 million in 1Q2024,
with a lower GPM of 22.9% compared to 27.7 % in 1Q2023. Gross profit in the
candy segment more than tripled y-o-y to EGP 40.0 million, with an expanded
GPM of 29.3% compared to 20.9% in the corresponding period last year.
Moreover, the biscuits segment turned around from a loss of EGP 0.5 million in
1Q2023 to generate EGP 9.1 million in gross profit in 1Q2024, with an improved
GPM of 23.2% compared to -5.0% in 1Q2023.

 

 

 

 

 

Revenue and Gross Profitability by Segment

 EGP mn               1Q2024   1Q2023   Change
 Cakes
 Revenue              2,012.5  1,512.2  33.1%
 Gross Profit         712.3    488.6    45.8%
 Gross Profit Margin  35.4%    32.3%    3.1 pts
 Bakery
 Revenue              1,057.7  767.5    37.8%
 Gross Profit         243.8    241.4    1.0%
 Gross Profit Margin  23.0%    31.5%    -8.4 pts
 Wafers
 Revenue              492.9    289.4    70.3%
 Gross Profit         159.7    98.6     62.0%
 Gross Profit Margin  32.4%    34.1%    -1.7 pts
 Rusks
 Revenue              165.4    139.5    18.5%
 Gross Profit         37.9     38.6     -1.8%
 Gross Profit Margin  22.9%    27.7%    -4.8 pts
 Candy
 Revenue              136.7    61.6     121.8%
 Gross Profit         40.0     12.9     211.4%
 Gross Profit Margin  29.3%    20.9%    8.4 pts
 Biscuits
 Revenue              39.4     9.5      314.7%
 Gross Profit         9.1      -0.5     N/A
 Gross Profit Margin  23.2%    -5.0%    28.3 pts
 Frozen
 Revenue              22.9
 Gross Profit         -1.3
 Gross Profit Margin  -5.7%
 Total Revenues*      3,927.5  2,779.7  41.3%
 Total Gross Profit*  1,201.6  879.7    36.6%
 Total GPM            30.6%    31.6%    -1.0 pts

*Includes contributions from Edita's imports segment

 

 

 

 

 

Segment Volumes and Prices

 EGP                   1Q2024  1Q2023  Change
 Cakes
 Packs (mn)            690     671     2.8%
 Tons (000s)           19.6    19.4    0.9%
 Av. Price (EGP)       2.92    2.62    29.4%
 Bakery
 Packs (mn)            194     183     5.5%
 Tons (000s)           11.1    10.1    9.8%
 Av. Price (EGP)       5.47    4.18    30.6%
 Wafers
 Packs (mn)            173     120     44.6%
 Tons (000s)           3.7     2.6     39.6%
 Av. Price (EGP)       2.85    2.42    17.8%
 Rusks
 Packs (mn)            34      44      -22.4%
 Tons (000s)           1.4     1.6     -9.4%
 Av. Price (EGP)       4.89    3.20    52.8%
 Candy
 Packs (mn)            23      13      69.5%
 Tons (000s)           1.1     0.9     26.2%
 Av. Price (EGP)       6.01    4.59    30.8%
 Biscuits
 Packs (mn)            10      4       157.2%
 Tons (000s)           0.3     0.2     98.9%
 Av. Price (EGP)       3.94    2.45    61.2%
 Frozen
 Packs (mn)            1
 Tons (000s)           0.2
 Av. Price (EGP)       38.54
 Total Packs* (mn)     1,123   1,035   8.6%
 Total Tons* (000s)    37.4    34.8    7.5%
 Av. Price/Pack (EGP)  3.50    2.69    30.1%

*Includes contributions from Edita's imports segment

 

 

 

 

Balance Sheet

The company's total loans and borrowings as at 31 March 2024 stood at EGP
2,694.0 million, up from EGP 2,030.5 million as at 31 December 2023. Total
bank overdrafts recorded EGP 866.7 million as at 31 March 2024 versus EGP
596.7 million recorded at the end of 2023. Cash balance stood at EGP 1,573.8
million as at 31 March 2024, up from EGP 1,356.3 million at year-end 2023.
Edita recorded a net debt of EGP 1,120.3 million as at 31 March 2024 compared
to EGP 674.2 million in net debt as at 31 December 2023.

 

Edita booked inventories of EGP 2,013.2 million as at 31 March 2024, up from
EGP 1,867.0 million as at year-end 2023. Meanwhile, trade and notes receivable
stood at EGP 236.0 million as at 31 March 2024, up from EGP 159.6 million as
at 31 December 2023.

 

Total CAPEX for the period ended 31 March 2024 came in at EGP 362.1 million,
with approximately equal contributions between expansionary additions,
machinery, and motor vehicle expenses, and a smaller contribution from total
maintenance costs.

 

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 1Q2024,
EGP 36.4 million in FX gain and a profit share deduction of EGP 35.6 million
were subtracted from EBITDA, bringing total EAS to IFRS adjustments on EBITDA
to EGP 72.0 million. A reconciliation between Edita's financial statements in
EAS with the IFRS-based financial statements for 1Q2024 is provided in the
table below.

 in EGP mn*         1Q2024 EAS                  Adjustment  1Q2024 IFRS
 Net Sales                             3,927.5              3,927.5
 COGS (excluding MOH)                  2,333.4              2,333.4
 MOH                                   336.3    (17.0)      353.3
 Total                                 2,708.7              2,725.9
 Gross Profit                          1,218.8  17.2        1,201.6
 Selling & Distribution Exp.           190.5    (10.3)      200.8
 Advertising & Marketing Exp.          145.1                145.1
 General & Admin. Exp.                 220.4    (8.4)       228.8
 Other Operational Exp.                33.9     0.5         33.4
 Profit from Operations                628.8    35.4        593.4
 Profit from Operations Margin         16.0%                15.1%
 Lease Finance Interest                5.5                  5.7
 Profit Before Income Tax              626.1    35.6        590.5
 Income Tax Expense                    154.1                154.1
 Net Profit After Tax                  472.0    35.6        436.4
 EBITDA                                745.2    72.0        673.1
 EBITDA Margin                         19.0%                17.1%

*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 1Q2024, the
Company derived 93.2% of its revenue from Egypt and 6.8% from regional export
markets. Learn more at ir.edita.com.eg.

Contacts

Ms. Menna Shams El Din

Chief of Investor Relations & Corporate Affairs Officer

T: +202 3851-6464 | M: +2010 0 154 2428 | menna.shamseldin@edita.com.eg
(mailto:menna.shamseldin@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",
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"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
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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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