Juhayna Food : Releases Second Quarter 2016 Earnings

Juhayna Releases Second Quarter 2016 Earnings

SECOND QUARTER 2016

REVENUE

EGP 1,333 mn

▲21% Y-o-Y

GROSS PROFIT

EGP 377 mn

▼ 2% Y-o-Y

EBIT

EGP 96 mn

▼ 40% Y-o-Y

NET INCOME

EGP 30 mn

▼ 54% Y-o-Y

DAIRY	YOGURT	JUICE	CONCENTRATES	AGRICULTURE	ARJU
EGP 558 mn	EGP 403 mn	EGP 284 mn	EGP 40 mn	EGP 25 mn	EGP 24 mn
▲6% Y-o-Y	▲ 28% Y-o-Y	▲ 42% Y-o-Y	▲ 54% Y-o-Y	▼ 21% Y-o-Y

FIRST HALF 2016

REVENUE

EGP 2,437 mn

▲24% Y-o-Y

GROSS PROFIT

EGP 737 mn

▲ 10% Y-o-Y

EBIT

EGP 247 mn

▼ 15% Y-o-Y

NET INCOME

EGP 110 mn

▼ 15% Y-o-Y

DAIRY	YOGURT	JUICE	CONCENTRATES	AGRICULTURE	ARJU
EGP 1,108 mn	EGP 640 mn	EGP 519 mn	EGP 67 mn	EGP 55 mn	EGP 49 mn
▲9% Y-o-Y	▲ 24% Y-o-Y	▲ 50% Y-o-Y	▲ 61% Y-o-Y	▲ 16% Y-o-Y

(Cairo, Egypt) - Juhayna Food Industries (JUFO.CA on the Egyptian Exchange), a leading Egyptian dairy, yogurt and juice manufacturer, announced today its consolidated results for the second quarter of 2016, reporting a 21% year-on-year rise in total consolidated revenue to EGP 1,333 million. Net income dropped 54% to EGP 30 million compared to EGP 65 million in the same period last year, translating into a net profit margin of 2.2% in 2Q16. On a first half basis, Juhayna reported a 24% increase in total consolidated revenue to EGP 2,437 million in 1H16 with net income standing at EGP 110 million, a 15% decrease compared to 1H15, while net profit margin also slid by two percentage points to 4.5% in 1H16.

The highest contributors to the top line remained the dairy and yogurt segments, representing 42% and 30% of revenues respectively in 2Q16 and 46% and 26%, respectively, in 1H16. Revenue growth during the first half was mainly driven by an increase in the yogurt and juice segments' revenues, which climbed 24% and 50% y-o-y to EGP 640 million and EGP 519 million respectively in 1H16, together contributing over 63% of the group's y-o-y increase in total consolidated revenues during the period.

Highlights of Juhayna's financial and operational results along with management's commentary on performance in the quarter follow below. Drawn from the fact that Juhayna operates in a highly competitive environment, management believes that it is in the best interest of shareholders to suspend disclosure of detailed segment analysis information. Juhayna's full financials are available for download on the company's website: www.juhayna.com.

GROUP CONSOLIDATED PERFORMANCE 2Q16 vs. 2Q15

Sales Gross EBITDA EBIT Net Profit Profit

2Q15 2Q16

1H16 vs. 1H15

Sales Gross EBITDA EBIT Net Profit Profit

1H15 1H16

TO OUR SHAREHOLDERS

Due to Ramadan's positive effect on our sales, Juhayna saw second quarter sales rise by 21% year-on-year to reach EGP 1.3 billion. Our dairy segment alone contributed EGP 558 million and constituted the lion's share of our top-line. Additionally, the juice segment rose by 42% during the second quarter to EGP 248 million in sales revenue.

1,101

1,333

Despite having a positive surge in our top-line, a series of difficult conditions prevented the company from growing its net profit, which declined by 54% year-on-year to EGP 30 million, with net profit margin reaching 2.2% compared to 5.9% for the same period last year. The drop in net profit comes on the back of instability in the domestic market during the last period, particularly with the foreign currency crisis and the impact of the devaluation of the Egyptian Pound, in addition to the shortage of the USD and the 1% increase in interest rates. Given the sensitive nature of the food sector, which touches the lives of every Egyptian household, Juhayna has opted to temporarily absorb the effects of these adverse conditions, then make an effort at restoring profitability by gradually increasing prices over the coming period.

385

377

225

148

161

96

65

30

The company also incurred EGP 11 million in demurrage expenses during the second quarter, as foreign currency deposit caps imposed by the banks hindered our ability to clear imported materials. However, this issue has now been solved with banks lifting these caps and allowing companies to deposit currency sourced from the parallel market.

On the operational front, we are pushing forward with our development initiatives with several new filling lines already installed and others in the final stages of installation. In total, Juhayna will commission seven new filling lines for juice, dairy, and yogurt products, as well as one new production line in the concentrates factory. Additionally, our distribution network continues to expand with the opening of a new distribution center in the North Coast. We are also working diligently to reduce our operational and financial risk by shortening the repayment period of our agents. On this front, Juhayna has entered into an agreement with Fawry for e-collection to facilitate the collection process and accelerate the flow of funds to the company's bank accounts, thus supporting liquidity.

1,967

2,437

As the market leaders in the food and beverage segment, we are continuously innovating and offering our customers new products to suit all their different demographics and tastes. As we head into the second half of the year, we are optimistic and confident in our ability to continue improving our operational efficiency and meeting our customers' needs.

Juhyana will capitalize on its innovative spirit and its continued capital investments to maintain its market leadership position, all while translating its success into value for its shareholders.

671

737

404

365

291

247

130

110

Safwan Thabet, Chairman & CEO

REVENUE BREAKDOWN

2% 3% 3% 2% 2%

18%

21%

2Q15

48%

2Q16

42%

29%

30%

2% 2%

3% 2% 2%

18%

1H15

52%

21%

1H16

46%

26%

26%

• Dairy  Yogurt  Juices  Concentrates  Agriculture  ARJU

I. CONSOLIDATED INCOME STATEMENT

('000 EGP)	1H16	1H15	% Change
Net Sales	2,437,217	1,967,450	24%
Cost of Sales	(1,700,181)	(1,296,017)	31%
Gross Profit	737,036	671,432	10%
Gross Profit Margin	30%	34%
Other Income	35,820	9,705	269%
Sales & Distribution Expenses	(404,065)	(292,727)	38%
General & Administrative Expenses	(103,513)	(69,650)	49%
Other (Expenses)	(15,811)	(18,058)	-12%
Board of Directors Remuneration	(590)	(550)	7%
Results from Operating Activities	248,877	300,151	-17%
EBITDA	364,706	404,067	-10%
EBITDA Margin	15%	21%
The Holding Company's Share in Profit of Companies Under Joint Control	(609)	-	N/A
Revenue of Investments Available for Sale	5,571	-	N/A
End of Service Remuneration	(2,058)	(9,503)	-78%
Financing Income & Financing Expenses	(96,869)	(81,104)	19%
Net Profit Before Tax	154,911	209,545	-26%
Tax Differences from Previous Periods	3,956	229	1625%
Income Tax	(17,007)	(37,203)	-54%
Investment Tax	(4,998)	(4,099)	22%
Deferred Tax	(26,616)	(38,097)	-30%
Net Profit	110,246	130,377	-15%