REG - Edita Food Ind SAE - Edita reports FY22 results
28/02/2023 13:45
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RNS Number : 3744R Edita Food Industries S.A.E. 28 February 2023
Cairo, 28 February 2023
Edita Food Industries Reports FY2022Earnings
Edita delivers record-breaking results for the year with revenue reaching EGP
7.7 billion and earnings doubling year-on-year to EGP 959.4 million with a net
profit margin of 12.5%. Regionally, Morocco booked EGP 176.2 million in its
first year of operation and export sales grew 73.0% y-o-y in FY2022.
Highlights of FY2022
Summary Income Statement (EGP mn)
EGP mn 4Q2022 4Q2021 Change FY2022 FY2021 Change
Revenue 2,523.4 1,539.4 63.9% 7,671.1 5,251.2 46.1%
Gross Profit 850.9 520.9 63.4% 2,607.8 1,673.4 55.8%
% Margin 33.7% 33.8% 34.0% 31.9%
EBITDA 478.2 288.5 65.7% 1,492.3 841.3 77.4%
% Margin 18.9% 18.7% 19.5% 16.0%
Net Profit 329.3 194.5 69.3% 959.4 471.9 103.3%
% Margin 13.0% 12.6% 12.5% 9.0%
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 year ended 31 December 2022,
recording revenue of EGP 7,671.1 million, a 46.1% y-o-y increase.
Profitability improved substantially throughout the year as reflected on gross
profit and net profit results. Edita saw a 55.8% y-o-y gross profit expansion
to EGP 2,607.8 million while net profit recorded EGP 959.4 million in FY2022,
up an impressive 103.3% y-o-y with an improved net profit margin of 12.5%
compared to 9.0% last year.
Edita's full-year results were supported by a particularly strong performance
in the fourth quarter of the year. In 4Q2022, Edita recorded EGP 2,523.4
million in revenue, up 63.9% y-o-y, reaching a record quarter for the company.
Strong top-line growth filtered down to the company's bottom-line, which
expanded an impressive 69.3% y-o-y in 4Q2022 to EGP 329.3 million with an
associated margin of 13.0% compared to 12.6% in the fourth quarter of the
previous year.
Edita's FY2022 revenue exceeded the initial forecasted budget and crossed the
EGP 7.6 billion mark despite a challenging operating environment. The record
revenue was driven by both higher prices and volume growth. In FY2022, average
price per pack reached EGP 2.17, up 19.6% y-o-y, and average price per ton
increased 38.8% y-o-y, driven by portfolio optimization, direct and indirect
price increases across all segments and higher price-point introductions to
ease the pressure on profitability margins. Despite the migration of consumers
to higher price-points, the company saw strong demand underlined by Edita's
leading market position and brand equity. In FY2022, total packs sold
increased by 22.1% y-o-y to 3,536.8 million, with cakes being the primary
contributor to volume growth. In 4Q2022, average price per pack increased
21.5% y-o-y to EGP 2.32 and total packs sold reached 1,088.2 million, up 34.6%
y-o-y compared to 4Q2021.
Cost of sales reached EGP 4,148.4 million in FY2022, up 46.8% y-o-y, due to
significant increases in the cost of direct material components. During the
year, packaging material costs increased by 47% y-o-y, fats and oil by 40%
y-o-y, sugar by 36% y-o-y, flour by 38% y-o-y and eggs by 42% y-o-y. Together
these ingredients account for more than 80% of total direct materials. In
4Q2022, cost of sales booked EGP 1,396.1 million, up a sharp 70.1% y-o-y due
to two rounds of devaluation during the quarter.
In FY2022, gross profit reached EGP 2,607.8 million, up 55.8% y-o-y, yielding
an improved gross profit margin of 34.0% versus the 31.9% booked last year.
Gross profit expanded year-on-year, despite surges in direct material costs,
as a result of price increases, operating leverage and manufacturing overheads
(MOH) efficiencies. MOH declined to 10.1% as a percentage of sales in FY2022
compared to 11.8% last year on the back of economies of scale and further
efficiencies. In 4Q2022, gross profit recorded EGP 850.9 million, up 63.4%
y-o-y, with a stable gross profit margin of 33.7% versus 33.8% in 4Q2021.
Total SG&A for FY2022 stood at EGP 1,254.8 million, a 26.9% y-o-y
increase; however, SG&A as a percentage of sales declined to 16.4%
compared to 18.8% in the previous year due to higher operating leverage. In
4Q2022, total SG&A increased 46.8% y-o-y to EGP 393.1 million, which
accounted for 15.6% as a percentage of sales versus 17.4% in 4Q2021.
EBITDA for the year stood at EGP 1,492.3 million, up 77.4% y-o-y, with an
associated EBITDA margin of 19.5% compared to 16.0% in FY2021. In 4Q2022,
EBITDA recorded EGP 478.2 million, up 65.7% y-o-y, with a sustained EBITDA
margin of 18.9% versus 18.7% in 4Q2021. Improved EBITDA was supported by
SG&A efficiency and a high operating leverage.
Net profit for the year grew an impressive 103.3% y-o-y to EGP 959.4 million
with an improved net profit margin of 12.5% compared to 9.0% in FY2021,
supported by strong performance down the income statement. In 4Q2022, net
profit grew by 69.3% y-o-y to reach EGP 329.3 million with a net profit margin
of 13.0% versus 12.6% in 4Q2021.
In FY2022, Edita recorded gross export sales of EGP 536.2 million, up by a
strong 73.0% y-o-y and contributing 7.1% to total revenues during the year
compared to 5.9% in FY2021. In 4Q2022, gross export sales almost doubled
year-on-year to reach EGP 227.3 million, which accounted for 9.2% of total
gross sales compared to 7.4% in 4Q2021.
On the regional front, Edita Morocco recorded EGP 176.2 million in revenue and
sold 84.3 million packs in its first full year of operations. In October 2022,
the facility began operating a second cake production line to produce Twinkies
products for the first time in Morocco. The new line doubled the facility's
production capacity, which led to EGP 87.2 million in revenue and 38.2 million
packs sold in 4Q2022. Edita Morocco market captured a 10% market share during
its first year of operations.
Operational Developments
Throughout the year, 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 baked filled sandwich was rebranded and reintroduced as Molto
Fino. The 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 highly successful in driving demand
for the new products. In October, the company launched a new cake product,
HOHOs Mix, a chocolate coated, chocolate cake filled with vanilla and cocoa
cream, introducing the EGP 5.0 price point in the segment. This was followed
later in the year by the launch of an upsized HOHOs Cream, retailing at EGP
5.0 per pack. In the first weeks of 2023, Edita introduced Molto Magnum Mix in
two sizes and three flavours: chocolate and cream, salted caramel and cream as
well as strawberry cheesecake and cream, retailing at EGP 10.0 per pack.
In order to protect profitability against the impacts of global inflationary
pressures and the devaluation of the Egyptian Pound, Edita implemented
multiple initiatives across its segments. The company's response included
widening the price spectrum across the whole portfolio, product
reconfiguration, price adjustments through direct and indirect price increases
and migrating consumer to higher price points. In 4Q2021 ahead of the first
devaluation, the first round of direct price increases was applied 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 3.0 per pack have been upsized and a
smaller variation retailing at EGP 2.0 per pack was introduced in October
2022. 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, a
series of indirect price increases were introduced at the cakes segment
through product downsizing. In 4Q2022, a new EGP 5.0 price point was
introduced in the cake segment. At the bakery segment, Molto Fino products
previously priced at EGP 5.0 per pack were repriced at EGP 8.0 per pack.
Finally, at the start of 2023, the company introduced the EGP 10.0 price point
at the bakery segment for the Magnum family and at the rusks segment for Bake
Rolz.
In light of the challenging global business environment that poses many
operational challenges, Edita's long-standing relationships with global and
local suppliers have allowed the company to maintain a highly favourable
supply position in the market. The teams are closely monitoring prices and
stock levels in order to optimize supply chain management and ensure business
continuity.
Overview of Segment Performance
On a segment basis, Edita's consolidated top-line grew 46.1% y-o-y with
revenue at the six segments benefitting from a combination of higher prices
and volume. The largest contributor to consolidated revenue growth during the
year was the cakes segment, which recorded a revenue of EGP 3.8 billion in
FY2022, up a substantial 69.2% versus FY2021. Growth in the cakes segment was
supported by an increase of 45.1% y-o-y in packs sold coupled with a 16.3%
y-o-y increase in the average price per pack. At the bakery segment, revenue
grew by 30.9% y-o-y in FY2022 to EGP 2.5 billion on the back of a 36.6% y-o-y
increase in the average price per pack, which outweighed the 4.2% y-o-y
decline in volumes sold. Meanwhile, revenue at the wafers segment grew 21.7%
y-o-y to EGP 742.9 million as the average price per pack increased 20.6% y-o-y
and volume remained relatively stable year-on-year. On a quarter-on-quarter
basis, bakery and wafers volumes are making a strong recovery back to normal
levels following sharp declines due to direct price increases. Revenue from
the rusks segment reached EGP 399.5 million during the year, up 32.1% y-o-y,
as average price per pack increased 39.4% y-o-y offsetting a 5.2% y-o-y drop
in packs sold. Revenue in the candy segment expanded 16.1% y-o-y to EGP 176.0
million in FY2022, driven by a 92.8% y-o-y increase in the average price per
pack. Finally, the biscuits segment saw its top-line expand by 171.1% y-o-y
recording EGP 39.0 million during the year as volume grew 124.9% y-o-y and
average price per pack increased 20.5% y-o-y.
Consolidated gross profit rose 55.8% y-o-y in FY2022 to reach EGP 2,607.8
million with year-on-year gross profit growth recorded across all segments
despite inflationary pressures and ongoing supply chain disruptions. Edita
mitigated raw material cost increases through improved pricing, portfolio
optimization and MOH efficiencies due to operating leverage.
The cakes segment recorded a year-on-year gross profit growth of 65.3% in
FY2022 with a gross profit of EGP 1,291.2 million and a GPM of 34.1% compared
to 34.9% in FY2021. Edita sustained profitability through product downsizing
and the introduction of new SKUs at a higher price point. Meanwhile, the
bakery segment saw its gross profit expand 48.3% y-o-y to reach EGP 906.4
million in FY2022, with an improved GPM of 35.9% against the 31.7% recorded
one year previously. These results were supported by direct price increases,
which reflected positively on margins. Similarly, the wafers segment recorded
a year-on-year gross profit growth of 46.4% in FY2022 with a gross profit of
EGP 249.5 million and a GPM of 33.6% compared to 27.9% last year, due to the
introduction of direct price increases and product reconfiguration. At the
rusks segment gross profit expanded by 35.1% y-o-y to reach EGP 117.7 million
for the year, with a GPM of 29.5% versus 28.8% in FY2021. Meanwhile, the candy
segment posted a year-on-year gross profit growth of 67.8% in FY2022 to EGP
36.6 million, with a GPM of 20.8% compared to 14.4% in FY2021. Finally,
Edita's biscuits segment recorded an eight-fold year-on-year gross profit
increase to EGP 6.4 million with a GPM of 16.5% versus 5.4% in FY2021.
Revenue and Gross Profitability by Segment
EGP mn 4Q2022 4Q2021 Change FY2022 FY2021 Change
Cakes
Revenue 1,281.3 649.7 97.2% 3,789.0 2,239.5 69.2%
Gross Profit 443.9 236.9 87.4% 1,291.1 781.1 65.3%
Gross Profit Margin 34.6% 36.5% -1.9pts 34.1% 34.9% -0.8pts
Bakery
Revenue 847.1 559.1 51.5% 2,524.8 1,928.8 30.9%
Gross Profit 289.9 197.9 46.5% 906.4 611.4 48.3%
Gross Profit Margin 34.2% 35.4% -1.2pts 35.9% 31.7% 4.2pts
Wafers
Revenue 215.4 187.8 14.7% 742.9 610.6 21.7%
Gross Profit 71.6 52.1 37.3% 249.5 170.5 46.4%
Gross Profit Margin 33.2% 27.8% 5.4pts 33.6% 27.9% 5.7pts
Rusks
Revenue 123.5 101.1 22.2% 399.5 302.3 32.1%
Gross Profit 36.0 30.2 19.3% 117.7 87.1 35.1%
Gross Profit Margin 29.2% 29.9% -0.7pts 29.5% 28.8% 0.7pts
Candy
Revenue 49.3 38.2 28.9% 176.0 151.6 16.1%
Gross Profit 9.9 4.1 140.6% 36.6 21.8 67.8%
Gross Profit Margin 20.0% 10.7% 9.3pts 20.8% 14.4% 6.4pts
Biscuits
Revenue 6.8 0.5 1133.7% 39.0 14.4 171.1%
Gross Profit (0.4) (0.5) -19.7% 6.4 0.8 732.9%
Gross Profit Margin -5.6% -85.5% 79.9pts 16.5% 5.4% 11.1pts
Total Revenues* 2,523.4 1,538.7 64.0% 7,671.1 5,250.5 46.1%
Total Gross Profit* 850.9 520.9 63.4% 2,607.7 1,673.4 55.8%
Total GPM 33.7% 33.9% -0.2pts 34.0% 31.9% 2.1pts
*Includes contributions from Edita's imports segment
Segment Volumes and Prices
EGP mn 4Q2022 4Q2021 Change FY2022 FY2021 Change
Cakes
Packs (mn) 694 432 60.8% 2,226 1,534 45.1%
Tons (000s) 19.7 14.3 37.4% 64.8 55.7 16.2%
Av. Price (EGP) 1.85 1.52 21.6% 1.70 1.46 16.3%
Bakery
Packs (mn) 244 205 18.9% 754 787 -4.2%
Tons (000s) 14.1 12.2 15.9% 44.2 46.1 -4.0%
Av. Price (EGP) 3.48 2.73 27.4% 3.35 2.45 36.6%
Wafers
Packs (mn) 96 109 -12.0% 354 351 0.9%
Tons (000s) 2.1 2.4 -10.9% 8.2 9.2 -11.6%
Av. Price (EGP) 2.24 1.72 30.4% 2.10 1.74 20.6%
Rusks
Packs (mn) 41 53 -21.8% 151 159 -5.2%
Tons (000s) 1.7 1.9 -6.7% 6.3 6.2 2.3%
Av. Price (EGP) 2.99 1.91 56.3% 2.64 1.90 39.4%
Candy
Packs (mn) 10 9 6.5% 35 59 -39.8%
Tons (000s) 0.8 0.8 -7.2% 3.0 3.4 -11.3%
Av. Price (EGP) 4.90 4.05 21.0% 4.96 2.57 92.8%
Biscuits
Packs (mn) 3 0.2 1099.6% 16 7 124.9%
Tons (000s) 0.1 0.0 228.9% 0.6 0.2 197.2%
Av. Price (EGP) 2.44 2.37 2.8% 2.42 2.01 20.5%
Total Packs* (mn) 1,088 808 34.6% 3,537 2,897 22.1%
Total Tons* (000s) 38.5 31.6 21.9% 127.1 120.8 5.2%
Av. Price/Pack (EGP) 2.32 1.91 21.5% 2.17 1.81 19.6%
*Includes contributions from Edita's imports segment
Balance Sheet
The company's total loans and borrowings as at 31 December 2022 stood at EGP
1,506.7 million, up from EGP 1,195.2 million as at year-end 2021. Total bank
overdrafts recorded EGP 501.7 million as at 31 December 2022 up from EGP 400.7
million at year-end 2021. Cash balance stood at EGP 1.4 billion as at 31
December 2022 versus EGP 1.0 billion at year-end 2021. Edita recorded EGP
117.7 million in net debt as at 31 December 2022 compared to EGP 189.3 million
in net debt at year-end 2021. In FY2022, the company maintained a strong
financial position with healthy leverage with a net debt to equity ratio of
0.04 and a net debt to EBITDA ratio of 0.08, down from 0.22 in the previous
year.
Edita's reported inventories of EGP 981.5 million as at 31 December 2022, up
from EGP 526.5 million as at 31 December 2021. Meanwhile, trade receivables
stood at EGP 141.9 million as at 31 December 2022, up from EGP 30.2 million as
at 31 December 2021.
Total CAPEX for the year ended 31 December 2022 was EGP 353.6 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 FY2022,
EGP 35.0 million in FX gain and EGP 16.6 million related to gains on the sale
of fixed assets were deducted from EBITDA. Moreover, a profit share deduction
of EGP 63.3 million was made, bringing total EAS to IFRS adjustments on EBITDA
to EGP 115.0 million. A reconciliation between Edita's financial statements in
EAS with the IFRS-based financial statements for FY2022 is provided in the
table below.
in EGP mn* FY2022 EAS Adjustment FY2022 IFRS
Net Sales 7,671.1 7,671.1
COGS (excluding MOH) 4,148.4 4,148.4
MOH 741.7 (29.4) 771.1
Total 4,890.1 (29.4) 4,919.5
Gross Profit 2,637.2 29.4 2,607.8
Gross Profit Margin 34.4% 34.0%
Selling & Distribution Exp. 444.3 (22.8) 467.1
Advertising & Marketing Exp. 341.6 341.6
General & Admin. Exp. 435.0 (11.2) 446.1
Other Operational Exp. 86.5 2.3 84.2
Profit from Operations 1,329.4 61.0 1,268.4
Profit from Operations Margin 17.3% 16.5%
Lease Finance Interest 9.5 (0.8) 10.4
Profit Before Income Tax 1,331.8 61.0 1,270.8
Income Tax Expense 311.4 0.1 311.4
Net Profit After Tax 1,020.3 60.9 959.4
Net Profit After Tax Margin 13.3% 12.5%
EBITDA 1,607.2 115.0 1,492.3
EBITDA Margin 21.0% 19.5%
*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 FY2022, the
Company derived 92.9% of its revenue from Egypt and 7.1% 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)
Ms. Mayar Hathout
Investor Relations Manager
T: +202 3851-6464 | mayar.hathout@edita.com.eg
(mailto:mayar.hathout@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
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
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