1 Mar 2021 13:52
Domty 4Q2020 earnings grows by 35% year on year
_____Highlights of 4Q20_____
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HIGHLIGHTS OF THE CONSOLIDATED INCOME STATEMENT:
(Numbers in EGP million):
Description | 4Q2020 | 3Q2020 | 2Q2020 | 1Q2020 | 4Q2019 |
Net Sales | 815.7 | 724.1 | 710.9 | 744.8 | 646.9 |
Gross profit | 205.3 | 179.5 | 167.3 | 183.9 | 173.8 |
Gross Profit Margin | 25.16% | 24.80% | 23.54% | 24.69% | 26.87% |
EBIT | 83.4 | 69.8 | 59.1 | 56.4 | 61.7 |
EBIT Margin | 10.23% | 9.65% | 8.31% | 7.57% | 9.53% |
Net Profit Before Tax | 69.9 | 56.4 | 43.5 | 44.5 | 52.6 |
Profit Margin Before Tax | 8.56% | 7.79% | 6.13% | 5.97% | 8.14% |
Net Profit | 52.9 | 41.3 | 31.7 | 32.1 | 39.1 |
Net Profit Margin | 6.48% | 5.7% | 4.46% | 4.31% | 6.05% |
EBITDA | 100.4 | 86.6 | 76 | 73.2 | 77.2 |
EBITDA Margin | 12.30% | 11.97% | 10.70% | 9.83% | 11.94% |
Cairo, 1 March 2021
Arabian Food Industries Company Domty S.A.E. (DOMT.CA on the Egyptian Exchange), announced today its consolidated results for 4Q2020.
Domty achieved a net profit of EGP 52.9 million in 4Q2020, after achieving sales of EGP 815.7 million.
Commenting on the 4 th quarter's performance, Domty Vice Chairman Mr. Mohamed El Damaty said:
The fourth quarter of the year was the best on all levels, the management had a clear goal to achieve an annual net profit exceeding 2019 in addition to reach a topline number that exceeds EGP 800 million and at the same time reducing the accounts receivable number of days in the market. Hence the company has succeeded in achieving all its goals.
Regarding the cheese category, we achieved the best quarter of the year despite Q4 low seasonality, due to the enhancement of the wholesale and retail sales and a partial recovery of government sales. The company increased Prices by 2% that partially compensated the increase of raw materials prices, over and above in Q4 we have recovered most of our lost market share during 2020.
As for the bakery category, we were operating at full capacity of lines number 1&2 from mid-October until the end of the year due to high demand as a result of schools reopen. This lead to increasing the profitability of the bakery segment. The company doubled its bread volume sales in 4Q2020 versus 3Q2020.
As for juice category, we achieved a satisfactory year on year growth in 4Q2020 in terms of volume and revenue.
in terms of profitability, despite the high prices of raw materials, especially oil and the increase in advertising expenses needed to support sales, Domty has succeeded in achieving a net profit margin of 6.5% in 4Q2020, which is a step towards the company's goal, but the most important thing was to reach a higher profit for the whole year compared to 2019. We were able to reach earnings of EGP 53 million in 4Q2020, which is considered as the second highest quarter in the history of the company. Certainly, Domty benefited from the drop in financing burden and we have relied on this drop to give an opportunity for sales to grow as required.
Cheese sales were not satisfactory to the management over the past period, and since cheese is an important pillar for the company, a strong sales volume recovery was a major goal in light of the fierce competition.
Domty earnings were mainly driven by the bakery segment over the past two years, which was even a tougher task in 2020 due to Covid 19 and the schools & universities closure for most of the year. We are now in a new reality and we have to accept and deal with this situation. We must evolve and re-develop and look at each segment with focus to achieve the desired profitability, our long term goal is to get the gross margin of cheese back to its levels that we achieved before the launch of the bakery segment, if we succeed to do that, Domty profits will be much better than the current rates, yet we have great challenges ahead we have to face and overcome.
On top of these challenges we have is the record rise in oil prices, which reached more than 50%, over and above the rise of powdered milk prices, so it will take us some time to raise our cheese prices, bearing in mind that competition in the cheese category is not limited to one competitor in the Domty Plus segment, but to other competitors in different segments/tiers, yet they do not achieve any significant profits although some of them are listed in the stock exchange and their numbers are visible.
Our cheese portfolio makes our task more difficult, especially in the brands other than Domty Plus, where we face no major challenges in raising its price, in the end we are committed in developing the profitability of this category, which also was affected by the decline in the tourism sector, which negatively affected the sales and profitability of our mozzarella product, that is considered one of the most profitable products in the cheese category.
Our plan to develop the profitability of cheese and raise its prices will require phasing out a group of agents and reducing their debt to give us the opportunity for several price increases which we started in 4Q2020 and will continue until the middle of 2021.
As for the bakery segment, it is has been proven that resuming schools is an extremely important pillar of the success and sales out of this category. We are dealing here with a 7 days shelf life product, hence any attempts to push excessive sales volume in the market results in high returns & consequently decreases its profitability, therefore, as I mentioned it's very important to secure the profitability of the other categories until the schools reopen, which what we hope so soon.
As for the juice category, in the beginning of 2021 we have made a decision bearing in mind the launch of the UHT milk hopefully before Ramadan to remove the juice distribution from the bakery, while operating the same number of vehicles, in order to avoid any increase in the distribution cost .Due to the fierce competition and heavy competitors spending in terms of investment in thousands of fridges, we are trying to sustain our market share without spending heavily which will affect the bottom line of the juice category .
Domty will announce two important announcements during the coming weeks as part of the company's policy for more diversity, coping with market conditions hence will contribute to a better future.
· Sales Revenue breakdown for 4Q2020:
Segment | Revenue (EGP mn) | Gross Margin By Segment |
Cheese | 575.9 | 23.28% |
Juice | 85.8 | 19.58% |
Bakery | 154 | 36.75% |
Total Revenues | 815.7 | 25.16% |
· Consolidated Income Statement
(EGP mn) | 2020 | 2019 |
Net Sales | 2995.5 | 2668.6 |
Cost of Sales | -2259.4 | -1984.5 |
Gross Profit | 736.1 | 684.1 |
Gross Profit Margin | 24.57% | 25.63% |
Sales & Marketing Expenses | -444.7 | -388.7 |
General & Administrative Expenses | -52.5 | -44.1 |
Total SG&A | -497.2 | -432.8 |
Other Income | 30 | 23.5 |
Provisions | -0.161 | -.017 |
Operating Profits | 268.7 | 274.8 |
Operating Profit Margin | 8.97% | 10.29% |
Net Interest Expense | -54.5 | -63.1 |
Health insurance contribution | -7.7 | -6.9 |
Net Profit Before Tax | 206.5 | 204.8 |
Income Tax | -48.5 | -48.6 |
Net Profit | 158 | 156.2 |
Net Profit Margin | 5.30% | 5.85% |
For viewing the full set of financials kindly visit domty.org
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About Arabian Food Industries Company Domty S.A.E.
Domty, founded in 1988and headquartered in Egypt, is a leader in the growing Egyptian cheese and juice market. The Company manufactures markets and distributes a range of branded white and processed cheeses and juice products, with a family of nearly 200 SKUs under a brand portfolio including Domty, Damo, Gebnety and Bravo. Domty is a household name and the number-one cheese producer in the nation by market share. The Company sells to tens of thousands of retail and business customers as well as to more than 46 export destinations. Learn more about Domty by visiting Domty.org
Contact
Ahmed Mohy EldinInvestor Relations and Corporate Affairs DirectorT: +202- 010 - 0555 2235| ahmed.mohy@domty.org