RNS Number : 0182O
Edita Food Industries S.A.E.
14 May 2018



Cairo, 14 May 2018

Edita Food Industries Reports 1Q2018 Earnings

Revenues record a strong 37.9% y-o-y increase to EGP 886 million driven by volume recovery across all segments and reflecting Edita's success in building an optimized portfolio to stimulate demand and support profitability; net profit for the period came in 51% higher year-on-year.


Highlights of 1Q2018

Summary Income Statement (EGP mn)

EGP mn








Gross Profit




% Margin







% Margin



Net Profit




% Margin



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 & EFIDq.L on the London Stock Exchange), a leader in the Egyptian packaged snack food market, announced today its results for the quarter ending 31 March 2018, with strong top-line growth of 37.9% y-o-y to EGP 886.1 million, yielding a net profit of EGP 60.9 million, up 50.8% y-o-y.


Strong growth during the first quarter of the year was driven by significant volume recovery across all segments, reflecting Edita's success in building a product portfolio that is more aligned with today's market dynamics and its ability to drive demand and defend market share despite operating in an inflationary and competitive environment.


Overall, total packs sold reached 630.8 million in 1Q2018, up a solid 46.3% y-o-y compared to the 431.1 million in 1Q2017 and down only 5.1% compared to the 664.4 million packs sold in 1Q2016. Meanwhile, Edita's average price per pack is beginning to stabilize following a period of aggressive year-on-year increases. Edita's average price per pack stood at EGP 1.40 in 1Q2018 up 1.2% q-o-q and down 5.7% compared to 1Q2017.


On a segment basis, the croissants segment was the largest contributor to revenue growth, with a 50.2% contribution to total growth in absolute terms during the period. Croissant revenue grew by 83.4% year-on-year to record EGP 268.7 million in 1Q2018, with growth being primarily volume-driven with total packs sold more than doubling to 176.2 million packs in 1Q2018 up from 88.3 million in the same period last year. Meanwhile, the cake segment, which constitutes the lion's share of revenue (weight in 1Q2018: 49.2%) grew by 24.2% y-o-y to record revenues of EGP 436.0 million, with a 34.8% contribution to total growth in absolute terms. Cakes revenue growth was also attributed to a surge in volume sold during the period, which climbed 35.8% y-o-y to 353.0 million packs in 1Q2018 supported by the evident recovery in demand across all products. The wafer segment also grew significantly, with revenues coming in at EGP 68.2 million in 1Q2018, representing an increase of 76.8% and contributing 12.2% to total growth in absolute terms, followed by the rusks segment.


Sales from export activities recorded EGP 64.1 million in 1Q2018, up 36.4% y-o-y and contributing 7.1% to Edita's total sales compared to 7.3% last year.


Cost of goods sold (COGS) came in at EGP 606.0 million in 1Q2018, up 43.4% y-o-y and representing a COGS/Sale ratio of 68.4% versus 65.8% in 1Q2017. COGS growth was attributed an increase in cost of direct materials as a percentage of sales, which grew to 54.8% in 1Q2018 from 50.9% in 1Q2017, however, was down compared to the 55.0% in 4Q2017. Meanwhile, the company managed to partially offset increases in materials with higher operational efficiency where manufacturing overheads (MOH), another significant contributor to total COGS, decreased as a percentage of sales to 10.8% in 1Q2018 (1Q2017: 12.1%).


Gross profit grew by 27.4% y-o-y to reach EGP 280.1 million in 1Q2018, yielding a gross profit margin (GPM) of 31.6% versus 34.2% in 1Q2017. Edita, however, is witnessing margin stability on a quarter-on-quarter basis.


Edita's selling, general and administrative (SG&A) expenses recorded EGP 165.1 million in 1Q2018, up 13.3% y-o-y from EGP 145.7 million in 1Q2017. However, SG&A fell significantly as a percentage of sales over the period to 18.6% in 1Q2018 from 22.7% in 1Q2017 owing to decreased advertising and marketing spend in absolute terms.


Strong revenue growth and higher cost efficiencies saw EBITDA record a solid 52.0% y-o-y increase to EGP 143.6 million in 1Q2018, with EBITDA margin at 16.2% up from 14.7% in 1Q2017.


Top-line growth filtered down to Net profit which came in at EGP 60.9 million in 1Q2018, up 50.8% y-o-y from EGP 40.4 million in 1Q2017. It is also worth noting that bottom-line growth comes despite a marked 42.2% y-o-y growth in interest expenses during the period to EGP 32.4 million.


On the operational front, Edita marked its first launch for the year in February 2018 with the introduction of its newest innovation, the TODO Mini Muffins (EGP 5), in vanilla and chocolate variations. Meanwhile, Edita also launched a complete rebranding campaign for its Molto line in February 2018, introducing a new packaging for the segment and supported by both below and above the line advertising. The croissant segment also witnessed the launch of an upsized Mini Molto Hazelnut in March 2018, with the number of pieces per pack increasing from 4 to 5 and  the price per pack increasing from EGP 2 to EGP 3.


Strategy Insight

Edita will continue to implement its strategy of volume acceleration in 2018, utilizing its continuously optimized product portfolio through new innovative and differentiated product launches alongside the introduction of more competitive products across the price spectrum to achieve optimum price-point segmentation. In parallel, the company will continue to focus on extracting higher value and supporting its margins post the inflationary and devaluation-related shocks.


On the regional expansion front, the quarter just ended saw Edita sign a shareholder agreement with Morocco's Dislog Group to form a new joint venture under the name of Edita Food Industries Morocco. The JV falls in-line with Edita's strategy to expand into fast-growing markets with large consumer bases and significant growth potential.


Overall, Edita's long-term strategy remains intact where in addition to product innovation and regional expansion, the company is actively exploring new revenue streams where it can leverage the strength of its distribution network and capitalize on its strong brand equity to maintain its market leadership position.


Overview of Segment Performance

Revenue growth during the first quarter of 2018 was primarily driven by the croissant segment, which recorded the fastest sales growth during the period at 83.4% y-o-y - reflecting the strong recovery in volumes - and contributed 50.2% to consolidated revenue growth in absolute terms. Meanwhile, the cake segment maintained its lead as the largest weight in total revenues in 1Q2018 at 49.2%, and recorded year-on-year growth of 24.2% y-o-y while contribution to consolidated revenue growth stood at 34.8% in absolute terms. Edita's smaller segments also made marked contributions to revenue growth in 1Q2018, namely the wafer segment which recorded the second-fastest y-o-y growth at 76.8% and contributed 12.2% to consolidated revenue growth in absolute terms.


Edita's revenue growth in 1Q2018 was primarily volume driven with total packs sold recording a solid 46.3% y-o-y increase to 630.8 million, while average price per pack inched down 5.7% y-o-y to EGP 1.40. On a quarter-on-quarter basis, average price per pack was up 1.2% in 1Q2018 while total packs sold fell 8.6% q-o-q with the first quarter of the year typically being a low season for the snack food market.


Average Factory Prices

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Average Edita





Segment Revenues and Volumes Sold



Net Sales (EGP mn)



Tons (000s)

Net Sales (EGP mn)



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At the gross profit level, the croissant segment was also the primary contributor to consolidated growth at 54.0% in absolute terms, with the segment's GPM recording q-o-q gains to 27.0% in 1Q2018 versus 25.5% in 4Q2017. Edita posted a consolidated gross profit of EGP 280.1 million and a GPM of 31.6% during the period (4Q2017: 31.4%).    



The cake segment constituted the largest share to Edita's revenues in 1Q2018 at 49.2%, with sales growth recording 24.2% y-o-y to EGP 436.0 million during the period. Segment growth was volume-driven as total packs sold recorded 353.0 million in 1Q2018, up 35.8% y-o-y, while average price per pack was down 8.5% y-o-y to EGP 1.24. On a quarter-on-quarter basis, average price per pack inched up 1.8% q-o-q, with volumes witnessing seasonal pressure and recorded an 8.3% q-o-q decline.


Gross profit from the cake segment recorded EGP 155.7 million in 1Q2018, up 21.5% y-o-y and yielding a gross profit margin of 35.7% versus 36.5% in 1Q2017 and 35.4% in 4Q2017. The cake segment also constituted the largest share of consolidated gross profit in 1Q2018 at 55.6% and contributed 45.8% to gross profit growth in absolute terms.


The croissant segment recorded the fastest growth in volumes in 1Q2018 and was the primary contributor to consolidated revenue and gross profit growth during the period. The segment posted sales of EGP 268.7 million in 1Q2018, up 83.4% y-o-y and with a weight of c.30.3% of Edita's total revenues. Segment growth was volume-driven with total packs sold increasing twofold to 176.2 million in 1Q2018, while average price per pack posted an 8.1% y-o-y decline to EGP 1.52, however, average price per pack recorded a 1.2% q-o-q increase in 1Q2018.


The croissant segment's gross profitability showed a marked improvement with gross profit recording EGP 72.5 million in 1Q2018, up a significant 81.4% y-o-y. Gross profit margin recorded 27.0% in 1Q2018 versus 27.3% in the same period last year and up from 25.5% in 4Q2017. The croissant segment constituted 25.9% of consolidated gross profit and was the primary contributor to growth at 54.0% in absolute terms in 1Q2018.



Revenues from the rusks segment recorded EGP 70.1 million in 1Q2018, up 6.1% y-o-y and contributing 7.9% to total revenues for the period. Revenue growth during the quarter was also volume-driven as the segment sold a total of 42.3 million packs in 1Q2018, up 8.6% y-o-y, while average price per pack inched down 2.3% y-o-y to EGP 1.66.


At the gross profit level, the rusks segment recorded a GPM of 27.6% in 1Q2018 down from 30.8% in the same period last year and 31.4% in 4Q2017. The segment's gross profit came in at EGP 19.4 million in 1Q2018, down 4.9% y-o-y. 



The wafers segment recorded the second-fastest growth in revenues following the croissants during the quarter at 76.8% y-o-y to EGP 68.2 million in 1Q2018. The segment's weight in total revenues stood at 7.7% in 1Q2018, up from 6.0% in the same period last and 6.2% in 4Q2017. The wafer recorded both volume and price growth during the period, with total volumes up a strong 62.9% y-o-y to 40.1 million packs, while average price per pack recorded an 8.5% y-o-y increase to EGP 1.70 in 1Q2018. Consequently, wafers' contribution to consolidated revenue growth was the third highest at 12.2% in absolute terms.


The segment's gross profit growth recorded 34.3% y-o-y to EGP 21.0 million. Meanwhile, GPM stood at 30.8% in 1Q2018 compared to 40.6% in 1Q2017 and 32.3% in 4Q2017. Overall the segment contributed 7.5% to Edita's gross profit in 1Q2018, up from 7.1% in 1Q2017 and 6.4% in 4Q2017, while its contribution to gross profit growth stood at 8.9% in absolute terms.


Revenues from the candy segment remained flat y-o-y at EGP 40.1 million in 1Q2018, with contribution to total revenues at 4.5% versus 6.2% in 1Q2017 and 4.3% in the previous quarter. The segment sold a total of 19.2 million pack in 1Q2018 compared to 19.3 million in the same period last year. Meanwhile, average price per pack remained stable at EGP 2.09 in 1Q2018 versus 2.08 in 1Q2017.


Gross profit from the candy segment recorded EGP 10.4 million in 1Q2018, down 34.2% y-o-y and delivering a GPM of 25.8% versus 39.2% in 1Q2017 and 30.9% in 4Q2017, with margin contraction coming on the back of higher material costs.


Balance Sheet

Edita's total assets stood at EGP 2.7 billion as at 31 March 2018, with property, plant and equipment (PP&E) including projects under construction constituting the lion's share at EGP 2.1 billion. Edita's total CAPEX expenditures in the first quarter stood at EGP 6.6 million.


As of 31 March 2018, cash & cash equivalents including treasury bills stood at EGP 253.8 million or 9.4% of total assets versus 8.0% at 31 December 2017. Trade receivables recorded EGP 21.8 million at the close of the quarter, reflecting the company's continued cash sales policy (97% of sales continue to be conducted on a cash basis). Edita's trade and other payables as at 31 March 2018 stood at EGP 437.1 million compared to EGP 400.4 million at 31 December 2017. Additionally, inventory days on hand stood at 37.9 days as of March 2018 versus 84.6 days in the same period last year, reflecting a normalized working capital cycle.


Total loans and borrowings stood at EGP 887.1 million at 31 March 2018 compared to EGP 923.1 million as at 31 December 2017. Net debt stood at EGP 633.3 million at the close of the quarter compared to EGP 706.5 million at year-end 2017. Total shareholders' equity stood at EGP 1.21 billion as at 31 March 2018.


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 1Q2018, EGP 1.7 million in FX losses were added to the EBITDA while EGP 0.6 million related to gains on the sale of fixed assets were deducted. Moreover, a profit share deduction of EGP 8.6 million was made, bringing total EAS to IFRS adjustments on EBITDA to EGP 7.5 million.


A reconciliation between Edita's financial statements in EAS with the IFRS-based financial statements for 1Q2018 is provided in the following table:


in EGP mn

 1Q2018 EAS


 1Q2018 IFRS

Net Sales




COGS (excluding M.O.H)*








Total COGS




Gross Profit



Gross Profit Margin



Selling & Distribution Exp.*




Advertising & Marketing Exp.*




General & Admin. Exp.*




Other Operational Exp.




Profit from Operations




Profit from Operations Margin



Profit Before Income Tax




Income Tax Expense




Net Profit After Tax




Net Profit After Tax Margin










*Figures are based on management accounts for better disclosure on expenses breakdown



Market Developments


Egypt's snack food market exhibited strong growth in the first two months of year according to the latest data available, with the segments where Edita operates recording a solid 30.4% y-o-y increase to EGP 1.4 billion as at February 2018. Strong market performance comes despite the challenging environment and the effect of double-digit inflation on consumers' purchasing power.


Edita's core cake segment recorded EGP 454.5 million as at February 2018, up 6.8% y-o-y, with the company holding a market leadership position with a 54.3% market share thanks to its continuous rollout of new innovations and differentiated products.


The croissant segment recorded similar growth levels at 5.4% y-o-y to EGP 219.1 million as at February 2018. Edita's position in this core segment continues to strengthen with the company recapturing market share to stand at 63.2% versus 62.8% in the same period last year and up from 60.9% at the close of 2017.


Rusks continued to record fast growth closing the first two months of the year 80.8% higher compared to February 2017 at EGP 154.5 million. Constituting 7.2% of the salty snack market, this fast growing and underserved segment is quick to absorb expanded capacities with Edita's market share standing at 41.5% at the close of the two month period.


The wafer segment stood at EGP 443.7 million in February 2018, recording a strong 42.2% y-o-y increase with Edita controlling 10.6% of the market versus 9.4% in the same period last year. Meanwhile, the candy segment was the fastest growing segment during the period closing at EGP 165.2 million or 132.0% higher y-o-y. Edita currently holds a leading position in the market with an 11.3% market share as at February 2018.



Selected Segments of the Snack Food Market in Egypt


Feb 2018 (EGP mn)

Feb 2017 (EGP mn)

% Change









Salty Snacks
















Total Market**




* Rusk market is c.7.2% of total salty snacks

Source: AC Nielsen Retail Audits




Edita's marketing efforts in the first quarter of the year continued to focus on supporting the company's portfolio optimization strategy and new product launches. Marketing venues included several above-the-line advertising, activities to increase product awareness as well as social and online media campaigns. Edita's A&M expenses stood at 4.4% of sales in 1Q2018 which is in-line with 2017 figures.


Edita's primary activity during the quarter was the rebranding campaign for the Molto segment, which included the introduction of new packaging for all the croissant segment and was supported by both below and above the line advertising. The company also launched an advertising campaign to support its new TODO Mini Muffin launches, introduced in early 2018 in two variations including vanilla and chocolate.


Going forward, Edita will continue to capitalize on its superior R&D capability and strong brand equity to drive demand growth and open up new market areas previously unserved and characterized by having a high growth potential.


Development of Average Consumer Price by Product Segment




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Sales & Distribution*


Geared towards improving its distribution channels mix, Edita's sales and distribution strategy revolves around two primary pillars: 1) generating more sales and increasing revenue contribution from retail channels and traditional points of sales, thus providing the company with a more accurate market pulse and greater flexibility in reacting to changing market dynamics and; 2) optimizing its portfolio through better price-point segmentation according to geographic distribution and income levels. The key element of the company's distribution strategy remains leveraging strong distribution network and extracting maximum value for all segments.


During 1Q2018, Edita's distribution network of  21 centers across the county served over 60,888 customers and operated a fleet of 603 distribution vans and 1,091 sales representatives.


Gross sales from Edita's wholesale channels recorded EGP 505.1 million in 1Q2018, up from EGP 309.8 million recorded in the same period last year, with its contribution rising to 56.1% to total sales compared to 47.8% in 1Q2017. Nevertheless, the company remains steadfast in its commitment to shift to more retail channels, which recorded EGP 281.0 million in 1Q2018, up 9.5% y-o-y and contributing 31.2% to total sales recorded in the period. Key accounts (modern trade) revenue recorded EGP 30.4 million, up 21.1% y-o-y, while direct supply recorded the fastest growth of 122.5% over the same period last year to reach EGP 19.9 million in 1Q2018. Together, direct supply and key accounts contributed 5.6% of total gross sales in 1Q2018 compared to 5.3% in the same quarter last year.


As a core pillar of the company's forward-looking strategy, Edita continues to expand its footprint to new export markets. Export sales during 1Q2018 grew 36.4% compared to the same quarter last year to reach EGP 64.1 million, contributing 7.1% to total sales.


*Revenue by distribution channel refers to gross sales


Supply Chain


Edita's supply chain department continues to focus on boosting operational efficiency while minimizing costs, leveraging its solid reputation and good relations with its supplier base to obtain favourable prices for its raw materials.


In 1Q2018, the cost of imported direct materials recorded 31% of total direct materials' cost, up from 21% in the same quarter last year. Edita's raw materials continued to form the largest constituent of the total direct materials bill at 71%, while packaging materials remained at 29%.


Industrial Operations


1Q2018 saw Industrial Operations continue to implement operational efficiency programs as well as support new launches and product developments. Following the completion of E08 with two lines currently operational, maintenance and upgrade works for current facilities is now a key priority for 2018.  Edita is also delivering on its strategy of product innovation and the continued roll-out of new offerings. In the cakes segment, Edita launched its first muffin product TODO Mini Muffin, in both vanilla and chocolate, while in the wafers segment Edita successfully launched new Freska Vanilla products. In the croissant segment, Edita increased the number of pieces in its Mini Molto Hazelnut from 4 to 5 and increased its price from EGP 2 per pack to EGP 3 per pack.


*Production capacity refers to theoretical capacity at the the time of purchasing the line. Actual capacity may differ according to changes in average weight per pack.


Human Resources


In 1Q2018, Edita's total headcount was 5,728 employees compared to 5,444 in the same period last year. As the primary driver of its success, Edita continues to invest in its employees. Edita also underwent a Participatory Gender Audit report in cooperation with the United Nations Global Compact Initiative in Edita's capacity as a signatory member. The company also kicked off a new CSR program, Build Pioneers, to encourage community development through educating mothers and children in Egyptian villages.


Edita's dedication to its employees is clearly reflected in their job-satisfaction rates, with average turnover across both blue and white collar employees at only 1% in 1Q2018.


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, croissants, rusks (baked wheat), and wafers 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 and MiMix. The Company also has the exclusive ownership of the international HTT 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 HTT brands across its territories. The Company holds strong number-one market positions in its core cake and croissant segments as well as in candy, a number-two market position in rusks and a growing market position in the wafers segment. In 1Q2018, the Company derived c.93% of its revenue from Egypt and c.7% from regional export markets. Learn more at ir.edita.com.eg



Ms. Menna Shams El Din

Investor Relations & Business Senior Development Manager

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


Ms. Tamara Hammam

Investor Relations Specialist

T: +202 3851-6464 | M: +2012 2 000 0432 | tamara.hammam@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", "could", "estimates", "expects", "forecasts", "intends", "is of the opinion", "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 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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