Juhayna Food Industries : Releases Third Quarter 2016 Earnings

Juhayna Releases Third Quarter 2016 Earnings

THIRD QUARTER 2016

REVENUE

EGP 1,259 mn

▲ 11% Y-o-Y

GROSS PROFIT

EGP 380 mn

▼ 9% Y-o-Y

EBIT

EGP 139 mn

▼ 23% Y-o-Y

NET INCOME

EGP 58 mn

▼ 34% Y-o-Y

DAIRY EGP 636 mn	YOGURT EGP 283 mn	JUICE EGP 293 mn	CONCENTRATES EGP 20 mn	AGRICULTURE EGP 4 mn	ARJU EGP 22 mn
▲ 10% Y-o-Y	▼ 5% Y-o-Y	▲ 22% Y-o-Y	▲ 58% Y-o-Y	▼ 33% Y-o-Y

NINE MONTHS 2016

REVENUE

EGP 3,696 mn

▲ 19% Y-o-Y

GROSS PROFIT

EGP 1,117 mn

▲ 3% Y-o-Y

EBIT

EGP 387 mn

▼ 19% Y-o-Y

NET INCOME

EGP 168 mn

▼ 23% Y-o-Y

DAIRY	YOGURT	JUICE	CONCENTRATES	AGRICULTURE	ARJU
EGP 1,744 mn	EGP 923 mn	EGP 812 mn	EGP 87 mn	EGP 59 mn	EGP 71 mn
▲ 9% Y-o-Y	▲ 14% Y-o-Y	▲ 38% Y-o-Y	▲ 60% Y-o-Y	▲ 10% 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 third quarter of 2016, reporting an 11% year-on-year rise in total consolidated revenue to EGP 1,259 million. Net income dropped 34% to EGP 58 million compared to EGP 88 million in the same period last year, translating into a net profit margin of 4.6% in 3Q16. On a nine-month basis, Juhayna reported a 19% increase in total consolidated revenues to EGP 3,696 million with net income standing at EGP 168 million, a 23% decrease year-on-year, while net profit margin also slid by 2.5 percentage points to 4.6% in 9M16.

The highest contributor to the top line remained the dairy segment with 51% of revenues, followed by juice and yogurt, representing 23% and 22% of revenues respectively in 3Q16. Year-to-date, revenue contribution is also led by dairy with 47%, followed by yogurt with 25% and juice with 22% of revenues. Revenue growth in 3Q16 was driven by an increase in the juice and dairy segments' revenues, which climbed 22% and 10% to EGP 293 million and EGP 636 million in the third quarter, together contributing 89% (or EGP 110 million) of the EGP 124 million year-on-year increase in revenues.

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 3Q16 vs. 3Q15

Sales Gross EBITDA EBIT Net Profit Profit

3Q15 3Q16

9M16 vs. 9M15

Sales Gross EBITDA EBIT Net Profit Profit

9M15 9M16

TO OUR SHAREHOLDERS

As we continue to adapt our business strategy against the backdrop of a challenging economic environment, we at Juhayna are working diligently to sustain our revenue growth trajectory and profitability levels while upholding the leading operational standards that we have always delivered and you have come to expect.

1,136

1,259

Despite a general escalation in prices and decreasing purchasing power across the Egyptian population, Juhayna recorded an 11% increase in revenues to EGP 1,259 million in the third quarter and a 19% to EGP 3,696 year-to-date. Revenue growth over the nine-month period was owing to enhanced sales across all of the firm's sectors, led by juice and followed by yogurt and milk respectively.

416

380

259

204

180

139

88

58

The continuation of our price uptick strategy, implemented to help us restore profitability amidst an inflationary macro environment, is helping us gradually pass on the production cost hikes we incur to the consumer and ensuring consistency in top-line growth. However, the effects of the severe weakening of the EGP against the USD and the lack of foreign currency trickled down to our bottom line, which posted a 34% year-on-year decline in 3Q16 to EGP 58 million compared to EGP 88 million in the same period last year.

Although Juhayna applied the increase in Egypt's value-added tax (VAT) rate in September of this year, it is important to note that the effect of the VAT increase on our company is minimal - less than 1% - as dairy and yogurt are exempt and juice products now incur 13% tax, up just 3 percentage points from the previous rate of 10%.

3,103

3,696

We plan to carry on the gradual planned price increases, transferring cost hikes to the consumer while simultaneously optimizing operational efficiency across our factories and administration, with a particular emphasis on our marketing efforts and a focus on decreasing expenses. We have decided to complete all projects currently underway but put a hold on any new investments for the time being, as well as to reduce risk associated with foreign currency by increasing reliance on domestically produced raw materials.

1,088

1,117

664

569

480

387

219

168

I am confident that our long-term vision for this company, with the support of our talented and dedicated team, will see us not only overcome the extenuating circumstances of Egypt's current economic situation but reach new heights in our ongoing success story. I look forward to another quarter of progress and value-creation for all our stakeholders.

Safwan Thabet, Chairman & CEO

REVENUE BREAKDOWN

1%1%

2%0.3% 1.7%

21%

23%

3Q15

51%

3Q16

51%

26%

22%

2% 2%

2%2% 2%

19%

22%

9M15

51%

9M16

47%

26%

25%

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

I. CONSOLIDATED INCOME STATEMENT

(EGP '000)	3Q16	3Q15	9M16	9M15
Net Sales	1,259,266	1,135,592	3,696,483	3,103,041
Cost of Sales	(879,111)	(719,502)	(2,579,292)	(2,015,519)
Gross Profit	380,156	416,090	1,117,191	1,087,522
Gross Profit Margin	30%	37%	30%	35%
Other Income	12,520	5,753	48,340	15,458
Sales & Distribution Expenses	(196,932)	(174,036)	(600,997)	(466,763)
General & Administrative Expenses	(42,734)	(36,951)	(146,247)	(106,602)
Other (Expenses)	(14,295)	(30,701)	(30,106)	(48,759)
Board of Directors Remuneration	(110)	(95)	(700)	(645)
Results from Operating Activities	138,605	180,060	387,482	480,211
EBITDA	203,882	259,252	568,630	664,456
EBITDA Margin	16%	23%	15%	21%
The Holding Company's Share in Profit of Companies Under Joint Control	-	-	(609)	-
Revenue of Investments Available for Sale	-	-	5,571	-
End of Service Remuneration	(1,029)	(152)	(3,088)	(9,654)
Financing Income & Financing Expenses	(65,896)	(45,373)	(162,765)	(126,477)
Net Profit Before Tax	71,679	134,536	226,590	344,080
Tax Differences from Previous Periods	-	1	3,956	231
Income Tax	(9,045)	(16,711)	(26,053)	(53,914)
Investment Tax	-	-	(4,998)	(4,099)
Deferred Tax	(4,445)	(29,591)	(31,060)	(67,687)
Net Profit	58,190	88,235	168,435	218,611
5%	8%	5%	7%