REG - Edita Food Ind SAE - Edita reports 2Q2024

Edita Food Industries SAEAnnouncement

13/08/2024 15:45

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RNS Number : 3092A  Edita Food Industries S.A.E.  13 August 2024

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Cairo, 13 August 2024

Edita Food Industries Reports 2Q2024 Earnings

Edita continues its growth momentum into the second quarter of 2024, with
revenues increasing 42.1% year-on-year to EGP 4.1 billion

 

Highlights of 2Q2024

Summary Income Statement (EGP mn)

 EGP mn        2Q2024   2Q2023   Change  1H2024   1H2023   Change
 Revenue       4,061.7  2,858.1  42.1%   7,989.1  5,637.8  41.7%
 Gross Profit  1,171.2  913.5    28.2%   2,372.8  1,793.2  32.3%
 % Margin      28.8%    32.0%            29.7%    31.8%
 EBITDA        618.3    583.6    5.9%    1,291.4  1,111.2  16.2%
 % Margin      15.2%    20.4%            16.2%    19.7%
 Net Profit    313.3    382.1    -18.0%  749.6    757.5    -1.0%
 % Margin      7.7%     13.4%            9.4%     13.4%

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 30 June 2024.
Consolidated revenues grew by 42.1% y-o-y to reach EGP 4.1 billion, driven by
repricing strategies and volume growth across the majority of its segments.
Gross profit increased by 28.2% y-o-y to EGP 1.2 billion with a gross profit
margin (GPM) of 28.8%, while EBITDA grew by 5.9% y-o-y to EGP 618.3 million,
with a margin of 15.2%. Further down the income statement, net profit recorded
EGP 313.3 million, down 18.0% y-o-y with a lower margin of 7.7% versus 13.4%
in 2Q2023, reflecting higher material costs and increased interest expenses
during the quarter.

 

On a six-months basis, revenues grew 41.7% y-o-y to EGP 8.0 billion, while net
profit marginally dropped to EGP 749.6 million, with a margin of 9.4% versus
13.4% in 1H2023.

 

Edita's business model consistently fuels strong revenue growth by stimulating
demand through portfolio optimization, new launches, continuous innovations,
and repricing strategies. In 2Q2024, revenue growth of 42.1% y-o-y was
dual-driven by higher prices and volume increases. The average price per pack
rose by 32.9% y-o-y to EGP 3.96, and the average price per ton increased by
39.0% compared to 2Q2023, primarily due to price increases in the cake and
bakery segments. Meanwhile, the number of packs sold increased by 6.9% y-o-y
in 2Q2024, primarily on the back of higher sales volumes in the cake and
wafers segment, bringing the total number of packs to 1,025 million during the
quarter. In 1H2024, the average price per pack increased by 31.5% y-o-y to EGP
3.72, and the average price per ton increased by 35.0% y-o-y, while volumes
grew 7.8% y-o-y, totalling 2,149 million packs during the period.

 

Edita's gross profit increased by 28.2% y-o-y, reaching EGP 1,171.2 million,
with a contracted margin of 28.8% versus 32.0% in 2Q2023. This is primarily
due to increases in the cost of goods sold (COGS), which rose by 50.6% y-o-y
to EGP 2,483.7 million, driven by higher inflation and a series of
devaluations. However, the company recently made price adjustments at the end
of 2Q2024 to mitigate the impact of the challenging operational environment.
Meanwhile, manufacturing overheads (MOH) as a percentage of sales remained
stable compared to both 2Q2023 and 1Q2024, accounting for 9.0% of revenues
during the period. On a six-months basis, gross profit grew 32.3% y-o-y to EGP
2.4 billion with a margin of 29.7% versus 31.8% recorded in the first half of
2023.

 

Total SG&A expenses rose to EGP 620.2 million in 2Q2024, up 48.6% y-o-y on
account of higher spending to boost new products and expand the distribution
network, in line with Edita's expansionary strategy. Despite the increased
spending, SG&A as a percentage of sales remained stable at 15.3%.
Year-to-date, SG&A expenses grew 47.6% y-o-y to EGP 1.2 billion,
accounting for 15.0% of sales compared to 14.4% in 1H2023.

 

EBITDA recorded EGP 618.3 million in 2Q2024, representing an increase of 5.9%
y-o-y. In 1H2024, EBITDA rose by 16.2% y-o-y to hit EGP 1.3 billion with a
margin of 16.2% versus 19.7% in 1H2023.

 

Net profit amounted to EGP 313.3 million, marking an 18.0% y-o-y decline, with
a profit margin of 7.7% compared to 13.4% in 2Q2023. This decrease was
attributed to a combination of elevated COGS and increased interest expenses
on new loans due to high interest rates. On a six-months basis, net profit
recorded EGP 749.6 million with a margin of 9.4% versus 13.4% during the
corresponding period, last year.

 

Edita recorded gross export sales of EGP 309.4 million in 2Q2024, up by 37.0%
y-o-y. In USD terms, the company reported export sales of USD 6.5 million,
down 11.0% y-o-y.

 

On the regional front, Edita Morocco recorded EGP 114.2 million, up 54.1%
y-o-y during the quarter.

 

Operational Developments

Edita continues to boost revenue through expanding its price spectrum,
improving its existing product lineup, and introducing new innovative
offerings. Additionally, the company is actively growing its presence in
smaller, nascent segments as part of its diversification strategy.

 

This is exemplified by the company's newest venture in May 2023, where it
entered Egypt's untapped frozen food segment by acquiring Fancy Foods. This
investment included a complete acquisition of assets: two full production
lines, additional machinery, land, a factory, and a distribution arm. After
the acquisition, Edita swiftly upgraded the assets to meet its quality
standards and initiated operations under its subsidiary, Edita Frozen Food
Industries, with the launch of Molto Forni. Since then, Edita has expanded
from its initial croissants and puff pastries to include a variety of new
baked goods like pizzas and sweet pies in different flavors, which have met
consumer demand and quickly become market favorites. The launch of these
products has also enhanced the company's presence and diversification within
the segment.

 

Similarly, at Edita Confectionery Industries, Edita's subsidiary in the candy
segment, it recorded a very strong performance during the quarter. New
restructuring initiatives have allowed for better focus on the segment, as
reflected in the year-on-year 2Q growth across all levels, including a 70.2%
y-o-y increase in revenues, and a 5.7% y-o-y increase in volumes. The
segment's net profit margin also improved, reflecting the positive impact of
these changes. Moreover, the market dynamics following the devaluation have
encouraged import substitution trends, benefiting the segment. This, coupled
with the expansion of its distribution network across all segments, with a
great focus on nascent segments has supported the candy line.

 

Edita's ongoing expansion and ability to meet increasing demand is supported
by the company's investment in new production and distribution capacities. The
company has  recently secured new debt facilities to finance its ambitious
growth plans, including the recently finalized long-term loan agreement with
Banque Misr  in May 2024 for EGP 990 million over an eight-year period. The
new loan facilitated the addition of new production lines within Egypt. Part
of the loan has already been allocated to installing a new bakery line at
Edita's existing E08 facility, which is now operational.

In addition to driving revenue growth at the top line, Edita is actively
exploring opportunities to enhance operational efficiency. This includes
streamlining transactions to be more seamless and faster, as well as embracing
advanced technologies to continually improve its operations. At the beginning
of the year, 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 2Q2024, Edita's total revenue amounted to EGP 4.1 billion, marking a
significant 42.1% y-o-y increase driven by robust revenue performance across
the company's segments. Leading this growth, the cake segment's revenue
climbed by 47.7% y-o-y to EGP 2.1 billion, driven  by a 35.5% y-o-y increase
in average price per pack and a 9.0% y-o-y rise in number of packs sold. In
the bakery segment, revenues grew by 21.2% y-o-y, reaching EGP 1.1 billion in
2Q2024. This increase was driven by a substantial 45.0% y-oy rise in the
average price per pack, which offset a 16.5% y-o-y decline in volumes. The
wafers segment grew by a notable 74.1% y-o-y increase to EGP 450.4 million in
revenues in 2Q2024, largely due to a 44.5%y-o-y rise in packs sold and a 20.5%
increase in average price per pack compared to 2Q2023. For the rusks segment,
revenues grew 43.8% y-o-y to EGP 161.0 million in 2Q2024, driven by a 39.8%
y-o-y increase in average price per pack and a 2.9% y-o-y rise in volumes,
recovering from last quarter's volume decline. Revenue from the candy segment
increased by an impressive 70.2% y-o-y to EGP 114.0 million in 2Q2024,
supported by a 61.0% increase in average price per pack and a 5.7% y-o-y rise
in number of packs sold. In the biscuits segment, revenue reached EGP 38.2
million during the quarter, up 15.1% y-o-y and driven by a 20.3% increase in
average price per pack which offset a 4.3% decline in pack volume. Finally,
Edita generated EGP 20.6 million in revenue from its new frozen segment in
2Q2024, reflecting ongoing portfolio expansions to include a variety of baked
products such as croissants, puff pastries, pizzas, and pies. On a six-month
basis, revenues increased by 41.7% y-o-y, reaching EGP 8.0 billion. The
strongest revenue gains were seen in the wafers, candy, and biscuits segments.
The wafers segment's revenue grew by 72.1% y-o-y, reaching EGP 943.3 million.
Revenue at the candy segment nearly doubled to EGP 250.7 million, while
biscuits revenue grew by 81.7% y-o-y, hitting EGP 77.6 million in 1H2024.

 

In 2Q2024, Edita's consolidated gross profit increased by 28.2% y-o-y to EGP
1.2 billion, fuelled by strong revenue growth that positively impacted the
gross profit. However, the gross profit margin contracted to 28.8% from 32.0%
in 2Q2023, primarily due to higher costs of goods sold (COGS).

 

On a segment basis, the cakes' gross profit grew 28.9% y-o-y reaching EGP
632.2 million with a contracted gross profit margin (GPM) of 29.5% from 33.8%
in 2Q2023. The bakery segment delivered a 15.5% y-o-y increase in gross profit
to EGP 335.2 million in 2Q2024, with a contracted GPM of 29.6% compared to
31.1% in 2Q2023. During the quarter, the wafers segment exhibited a strong
performance with gross profit increasing 66.7% y-o-y to EGP 131.9 million,
while its GPM decreased to 29.3% from 30.6% in 2Q2023. Gross profit in the
rusks segment grew by 13.2% y-o-y to EGP 36.1 million in 2Q2024, with a lower
GPM of 22.4% versus 28.5% in 2Q2023. The candy segment showed impressive
growth, with gross profit rising by 84.4% y-o-y to EGP 33.5 million, and an
expanded GPM of 29.4% compared to 27.1% in the same period last year. At the
biscuits segment, gross profit recorded EGP 4.4 million in gross profit during
the period, marking a 34.2% y-o-y decline and with a lower GPM of 11.6% versus
20.3% in 2Q2023.   In 1H 2024, gross profit grew by 32.3% y-o-y to EGP 2.4
billion. Candy and biscuits both showed significant growth, with candy
increasing by 137.1% y-o-y to EGP 73.5 million and biscuits growing by 117.0%
y-o-y to EGP 13.6 million. Margins for both segments also improved, with candy
recording a higher margin of 29.3% compared to 24.1% in 1H 2023, and biscuits
achieving a margin of 17.5% compared to 14.6% in the corresponding period,
last year.

 

 

 

 

Revenue and Gross Profitability by Segment

 EGP mn               2Q2024   2Q2023   Change    1H2024   1H2023   Change
 Cakes
 Revenue              2,145.8  1,452.6  47.7%     4,158.3  2,964.9  40.3%
 Gross Profit         632.2    490.3    28.9%     1,344.5  978.9    37.3%
 Gross Profit Margin  29.5%    33.8%    -4.3pts   32.3%    33.0%    -0.7pts
 Bakery
 Revenue              1,131.7  934.6    21.1%     2,189.4  1,702.0  28.6%
 Gross Profit         335.2    290.2    15.5%     578.9    531.6    8.9%
 Gross Profit Margin  29.6%    31.1%    -1.5pts   26.4%    31.2%    -4.8pts
 Wafers
 Revenue              450.4    258.7    74.1%     943.3    548.0    72.1%
 Gross Profit         131.9    79.1     66.7%     291.6    177.7    64.1%
 Gross Profit Margin  29.3%    30.6%    -1.3 pts  30.9%    32.4%    -1.5pts
 Rusks
 Revenue              161.0    112.0    43.8%     326.4    251.5    29.8%
 Gross Profit         36.1     31.9     13.2%     74.0     70.5     5.0%
 Gross Profit Margin  22.4%    28.5%    -6.1 pts  22.7%    28.0%    -5.4pts
 Candy
 Revenue              114.0    67.0     70.2%     250.7    128.6    94.9%
 Gross Profit         33.5     18.2     84.4%     73.5     31.0     137.1%
 Gross Profit Margin  29.4%    27.1%    2.3pts    29.3%    24.1%    5.2pts
 Biscuits
 Revenue              38.2     33.2     15.1%     77.6     42.7     81.7%
 Gross Profit         4.4      6.7      -34.2%    13.6     6.3      117.0%
 Gross Profit Margin  11.6%    20.3%    -8.7 pts  17.5%    14.6%    2.9pts
 Frozen
 Revenue              20.6     -        -         43.5     -        -
 Gross Profit         (2.1)    -        -         (3.4)    -        -
 Gross Profit Margin  -10.2%   -        -         -7.8%    -        -
 Total Revenues*      4,061.7  2,858.0  42.1%     7,989.1  5,637.7  41.7%
 Total Gross Profit*  1,171.2  913.5    28.2%     2,372.8  1,793.2  32.3%
 Total GPM            28.8%    32.0%    -3.2 pts  29.7%    31.8%    -2.1pts

*Includes contributions from Edita's imports segment

 

 

 

 

 

 

Segment Volumes and Prices

 EGP                   2Q2024  2Q2023  Change  1H2024  1H2023  Change
 Cakes
 Packs (mn)            648     594     9.0%    1,337   1,265   5.7%
 Tons (000s)           18.0    16.8    7.5%    37.6    36.2    4.0%
 Av. Price (EGP)       3.31    2.45    35.5%   3.11    2.34    32.6%
 Bakery
 Packs (mn)            174     208     -16.5%  368     392     -6.2%
 Tons (000s)           9.3     10.9    -15.1%  20.3    21.0    -3.1%
 Av. Price (EGP)       6.50    4.48    45.0%   5.96    4.34    37.1%
 Wafers
 Packs (mn)            147     102     44.5%   320     222     44.5%
 Tons (000s)           2.9     2.0     43.0%   6.6     4.7     41.1%
 Av. Price (EGP)       3.06    2.54    20.5%   2.95    2.47    19.1%
 Rusks
 Packs (mn)            31      30      2.9%    65      74      -12.1%
 Tons (000s)           1.2     1.1     9.5%    2.6     2.7     -1.7%
 Av. Price (EGP)       5.18    3.71    39.8%   5.03    3.41    47.6%
 Candy
 Packs (mn)            16      15      5.7%    38      28      36.2%
 Tons (000s)           0.8     0.8     6.5%    2.0     1.7     16.9%
 Av. Price (EGP)       7.33    4.56    61.0%   6.54    4.57    43.1%
 Biscuits
 Packs (mn)            10      10      -4.3%   20      14      40.7%
 Tons (000s)           0.3     0.4     -15.1%  0.6     0.5     19.7%
 Av. Price (EGP)       3.97    3.30    20.3%   3.96    3.06    29.2%
 Frozen
 Packs (mn)            0.4     -       -       1.0     -       -
 Tons (000s)           0.1     -       -       0.3     -       -
 Av. Price (EGP)       52.15   -       -       43.99   -       -
 Total Packs* (mn)     1,025   959     6.9%    2,149   1,994   7.8%
 Total Tons* (000s)    32.6    31.9    2.2%    70.0    66.7    5.0%
 Av. Price/Pack (EGP)  3.96    2.98    32.9%   3.72    2.83    31.5%

*Includes contributions from Edita's imports segment

 

 

 

 

Balance Sheet

The company's total loans and borrowings as at 30 June 2024 stood at EGP
2,590.1 million, up from EGP 2,030.5 million as at 31 December 2023. Total
bank overdrafts recorded EGP 388.4 million as at 30 June 2024 versus EGP 596.7
million recorded at the end of 2023. Cash balance stood at EGP 878.7 million
as at 30 June 2024, down from EGP 1,356.3 million at year-end 2023. Edita
recorded a net debt of EGP 1,711.5 million as at 30 June 2024 compared to EGP
674.2 million in net debt as at 31 December 2023.

 

Edita booked inventories of EGP 2,395.5 million as at 30 June 2024, up from
EGP 1,867.0 million as at year-end 2023. Meanwhile, trade and notes receivable
stood at EGP 151.4 million as at 30 June 2024, down from EGP 159.6 million as
at 31 December 2023.

 

Total CAPEX for the period ending 30 June 2024 amounted to EGP 773.0 million,
with the majority allocated to expansion and machinery additions.

 

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 1H2024,
EGP 53.9 million in FX gains and a profit share deduction of EGP 76.1 million
were subtracted from EBITDA, bringing total EAS to IFRS adjustments on EBITDA
to EGP 162.3 million. A reconciliation between Edita's financial statements in
EAS with the IFRS-based financial statements for 1H2024 is provided in the
table below.

 in EGP mn*         1H2024 EAS                    Adjustments  1H2024 IFRS
 Net Sales                              7,989.1                 7,989.1
 COGS (excluding MOH)                   4,817.1                 4,817.1
 MOH                                    680.7     (37.4)        718.1
 Total                                  5,578.7                 5,616.4
 Gross Profit                           2,410.4   37.7          2,372.8
 Selling & Distribution Exp.            387.2     (20.2)        407.4
 Advertising & Marketing Exp.           294.1                   294.1
 General & Admin. Exp.                  474.9     (18.5)        493.5
 Other Operational Exp.                 74.7      0.6           74.1
 Profit from Operations                 1,179.5   75.7          1,103.7
 Profit from Operations Margin         14.8%                   13.8%
 Lease Finance Interest                63.4                    (63.4)
 Profit Before Income Tax              1,146.9    (6.6)        1,040.3
 Income Tax Expense                    290.6      0.1          290.7
 Net Profit After Tax                  856.3      106.7        749.6
 EBITDA                                1,453.7    162.3        1,291.4
 EBITDA Margin                         18.2%                   16.2%

*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 2Q2024, the Company derived 92.3% of its revenue from Egypt and 7.7% 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)

 

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