REG - Edita Food Ind SAE - Edita's 1Q2022 IFRS financial statements

Edita Food Industries SAEAnnouncement

27/06/2022 07:01

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RNS Number : 2037Q  Edita Food Industries S.A.E.  27 June 2022

http://www.rns-pdf.londonstockexchange.com/rns/2037Q_1-2022-6-26.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/2037Q_1-2022-6-26.pdf)

Edita Food Industries Reports 1Q2022 Earnings

Edita starts the year with a strong quarter recording an earnings growth of
81.3% y-o-y to EGP 148.1 million and revenues of EGP 1.6 billion in 1Q2022.

Highlights of 1Q2022

Summary Income Statement (EGP mn)

 

 EGP mn        1Q2022     1Q2021     Change
 Revenue        1,559.0    1,166.3   33.7%
 Gross Profit   556.6      399.2     39.4%
 % Margin      35.7%      34.2%
 Net Profit     148.1     81.7       81.3%
 % Margin      9.5%       7.0%

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 quarter ended 31 March 2022,
recording revenues of EGP 1,559.0 million, a 33.7% y-o-y increase, and a 39.4%
y-o-y gross profit expansion to EGP 556.6 million. Net profit recorded EGP
148.1 million in 1Q2022, up an impressive 81.3% y-o-y with a net profit margin
of 9.5% compared to 7.0% in the same quarter last year.

 

Edita carried over the momentum from 2021 into the first quarter of the new
year to deliver strong top-line results, profitability growth and improved
margins. Having pre-emptively repriced and optimized its product portfolio in
4Q2021, the company was able to navigate the inflationary environment
exacerbated by the devaluation of the Egyptian pound. Average price per pack
in the first quarter reached EGP 2.03, up 15.6% y-o-y, driven by portfolio
optimization as well as direct and indirect price increases carried out in
4Q2021 to ease the pressure on profitability margins. Edita's ability to
increase prices and grow sales volumes demonstrates strong demand resilience
for the company's products. On the volumes front, Edita recorded a 15.6% y-o-y
growth in total packs sold to 769.7 million, with cakes, wafers and rusks
being the main contributors to volume growth in 1Q2022.

 

In 1Q2022, Edita's gross profit recorded EGP 556.6 million, up 39.4% y-o-y,
yielding a gross profit margin of 35.7% versus the 34.2% recorded last year.
The results were underlined by a successful migration to higher-price points
and efficiently managing costs to protect profitability. Manufacturing
overheads (MOH) declined to 10.6% as a percentage of sales in 1Q2022 compared
to 13.2% in 1Q2021 on the back of higher volumes and economies of scale.
Consequently, gross profitability improved despite a 38% y-o-y increase in
direct material costs brought about by surges in raw material costs and supply
chain disruptions that are driving global commodity prices to record highs.

 

Net profit for the quarter grew an impressive 81.3% y-o-y to EGP 148.1
million, with a net profit margin of 9.5% versus 7.0% for 1Q2021, supported by
strong performance down the income statement. Edita incurred an EGP 27.5
million FX loss in 1Q2022 due to the devaluation of the Egyptian pound in
March 2022.

 

In 1Q2022, Edita recorded gross export sales of EGP 78.0 million, up by a
strong 75.4% y-o-y and contributing 5.0% to total revenues during the quarter
compared to 3.8% in 1Q2021.

 

On the regional front, Edita officially inaugurated its state-of-the-art
Morocco facility, which commenced operations in December 2021 with the
production of the company's flagship cake brand HOHOs. The facility marks a
major milestone in Edita's regional expansion strategy and enables the company
to strengthen its presence in the attractive Moroccan market which boasts a
dynamic economy and population of 37 million consumers but more importantly
sets the foundations from which to further grow across the MENA region. In
1Q2022, Edita Morocco recorded EGP 20.5 million in revenues in its first full
quarter of operations.

 

 

Operational Developments

Rolling out innovative and differentiated products that appeal to consumer
evolving tastes continues to be a top priority for the company in 2022. In the
first weeks of 2022, Edita 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
by the launch of Oniro LAVA at the biscuit segment, retailing at a competitive
EGP 3.0 per pack. Sold under the Oniro brand, Oniro LAVA is a flavoured
biscuit filled with cocoa hazelnut cream and is offered in vanilla and
chocolate flavours. In February 2022, Edita announced the rebranding of its
Molto Sandwich line of baked snacks. 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.

 

On March 21, 2022, the Central Bank of Egypt decided to raise key interest
rates by 100 basis points and to allow increased exchange rate flexibility as
a means of absorbing macroeconomic shocks and maintaining Egypt's economic
stability and competitiveness. In response to the devaluation of the Egyptian
pound, Edita instituted price increases at its bakery and wafer segments.
Bakery products previously priced at EGP 4.0 per pack have been repriced at
EGP 5.0 per pack, while bakery products priced at EGP 5.0 per pack have been
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. The
increase in prices is aimed at mitigating the impacts of global inflationary
pressures and persistently rising commodity prices as well as protecting
profitability.

 

The current state of the global business environment poses many operational
challenges, including supply chain disruptions, shortages in raw materials and
reduced availability of freight services. The challenges are in part mitigated
by Edita's long-standing relationships with global and local suppliers, which
have allowed the company to maintain a highly favourable supply position in
the market. Edita is closely monitoring prices and stock levels across its
markets with the goal to secure its requirements at the best cost attainable
and to ensure production continuity.

 

 

-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 1Q2022, the
Company derived 95.0% of its revenue from Egypt and 5.0% 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

 

Ms. Alia Balbaa

Investor Relations Manager

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

 

Forward Looking Statements

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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
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subject to change without notice. The Company does not undertake any
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