Edita Food Industries Company (S.A.E) ($EFID)

Hi, everyone. Thank you for dialing in. This is Noha Baraka from CI Capital Research. We have [indiscernible] today Edita 2025 Results Conference Call. From management team. We have with us Engineer Hani Berzi, Chairman and Group CEO; Mr. Sameh Magdi, Deputy Group CEO and CFO; Mr. [ Amatemi ], CEO, Egypt; Mr. [ Amaral Apar ] IR and Investment Analysis Senior Manager. As usual, we will start off with a brief presentation by management team, and then we will open the floor for questions. Please go ahead.

Thank you. Thank you, Noha. Good afternoon, everyone. Ladies and gentlemen, thank you for joining our first quarter and full year 2025 Results Call. I would also like to thank once more [indiscernible] from CI Capital for hosting us today, and I wish you all a very happy [indiscernible]. Joining me are Sameh Magdi as the Deputy Group CEO; and Ahmed Samy CEO, Egypt, for Edita group industries making and bakery and our Senior Investor Relations and investment analysts manager. I'm very pleased to report a strong performance for EBITDA in 2025, having a much slower year in which we celebrated the new [indiscernible] growth, innovating and leadership in the different [indiscernible] market. We closed the year with revenues of EGP 20.9 billion, up 29.5% year-on-year with a net profit of EGP 2.4 billion, up 72.6%, reflecting meaningful progress and growth across both top line growth and profitability. The year was characterized by a [indiscernible] improvement in operational momentum are in the latter part of 2025. The positive demand trends that began to emerge in May 2025 accelerated further in the fourth quarter resulting in an exceptional close to the year with fourth quarter revenue increasing by 44.44% year-on-year to EGP 6.2 billion in while net profit increased by 178.6% EGP 859.5 million. This [ ran ] finish was driven by a combination of volume recovered, successful 5-point migration, richer product risk and continued operational level. Our cakes and [indiscernible] segment remain remaining intent of perform, while our loan base and category continue to stay and support directly. At the same time, we made tangible progress on our strategic priorities beyond the core business. We enhanced our [indiscernible] through continued export [indiscernible] further development in Morocco and imported milestone in Iran. And I'm very pleased or announcing that today, we start launching our [indiscernible] the rate market and a very promising and very factors [indiscernible] we also continue and, of course, despite the original [indiscernible] that we go with. We also continue investing behind future demand, we [indiscernible] capacity expansion in Egypt. As you know, in poker, we signed an asset purchase agreement with EGP [ 320 million ] to acquire 22 [indiscernible] production. Since then, I'm very pleased also with our industrial operation and engineering team that they managed to dismantle and install two of these lines with one already operational and the second expected to commence operation demand post reaction. The remaining two lines have been dismantled and relocated to our facility, one is good operation by the end of this year, while the final [indiscernible] has been reserved for future capacity. Once fully operational, with additions are expected to increase our total production capacity in core segment by around 15%, further pressing our leadership position in supporting future growth. In parallel, we also expanded the long-term potential of our rent [indiscernible] for our January 2026 agreement reported to expand our ownership of the whole business and [indiscernible], [indiscernible] this is a strategically important step that order or the organic functionality and further protection our ability to build stable regional brand over the offer. As we rely for our third year journey, this performance, especially [indiscernible], we reimported the dealers of our brand, the agility of our operating model and the strength of our capability. More importantly, that give us confidence in the outlook plan. We see a favorable condition for continued growth, supported by improving consumption a stronger operating base and the investment we have main capacity, innovation and regional expansion. And as we look ahead, our progress went maximize return in our home market continue leading our regional footprint and still our learning segment in a disciplined and profitable. With that, I will now hand over to [ Jan ] to go through the financials before we open the door for questions.

Thank you. Good afternoon, everyone. Let me take you through the key financial highlights for the full year growth [indiscernible] portfolio. Revenue recorded EGP [ 24 ] billion after [ 25% ] year-on-year, supported by a [indiscernible] of the year and an exceptional [indiscernible] in Q4, we revenue reached EGP 6.2 billion, up 45% year-on-year, reflecting strong volume recovery and continued success in price going [indiscernible] Operationally, full year '25 total to sold increased 19% year-on-year to 255,000 ton, while average price of 31% to 31% to [indiscernible] by broadband. This momentum accelerated in Q4 '25 with total tax sold reaching EGP 4.1 billion, up 23% year-on-year and total tons sold rising 47%. While average price per pack increased to EGP 5.8 coming from 4.5% to [indiscernible] gross profit reported 44% year-on-year [indiscernible] billion, with gross margin expanding to 33.9% from 30.4% in full year -- the Q4 '25 gross profit rose 65% year-on-year to EGP 2.2 basis with margin improving to 35.1%. Supported by stronger operation average and improved gross majority. SG&A expenses rose to EGP 4 billion in full year '25, up 29.6% year-on primarily driven by higher marketing investments despite higher [indiscernible], SG&A remained [indiscernible] on Q4 25, NGL increased 12.2% year-on-year to EGP 4 million, but the client 15.6% of sales compared to 17.7% in Q4 [indiscernible] EBITDA to EGP 4 billion in full year '25, reflecting 58% 8% year-on-year with margin expanding 1 from 15.7% in full year '25. Q4 '25 EBITDA, both as [indiscernible] with both extending to 21.5% from 15.7% in Q4[indiscernible] Net costs reported $2.4 million in are set increase facility. With that working on letter from .[indiscernible]. In Q4 '25, net profit surged [indiscernible] with net margin reaching 13% compared to 17 the prior year quarter. On the regional crop, net export sales reached EGP 2 billion in full year '25, representing 9% of total ore while it so delivered basically EGP 572 million in revenues for the year, reflecting continued operation in progress and stronger but capability. our balance sheet perspective, as of [indiscernible] included a net cash position of EGP [ 467 ] million compared to net debt of EGP 2.4 billion million. Working capital efficiency continued to improve within the 20 days and receivables both positively versus last year. Total CapEx for the year ended 31st of amounted to EGP mainboard rev, primary order extension at investment with additional expenditures for material. Overall, '25 demonstrated our ability to transit strong top line momentum and committed to margin expansion and modern line with exceptional good future provided particular [indiscernible]. With that, we open the floor to your questions. If we can open the door for the questions. Thank you.

[Operator Instructions] We have a question on the chat box. How do you see the current regional unrest and the EGP depreciation commodity inflation on your operations and the expectations for the exports and input costs. And if you are experiencing any supply chain disruption?

Having the question, please, as I know you can reflect the part of the service on the of and additional [indiscernible]

So we started to see immediate material price increase on our [indiscernible] on packaging, we've seen increases in the range of 12% to 15%. Important materials as well as the [indiscernible] receivable to be 10% to 15%, slightly related to the Egyptian power and depreciation. We've seen as well some disturbance from the logistics with as the time for materials coming either from the East part of West would see an impact. We've seen as well some impact on the export logistics. We are backing each point separately with the logistics of exports leaving the export operation into the [indiscernible] business. We see still some challenges with a lot of trucks stock in the [indiscernible] area to serve the local markets there. We will be managing this part to cutting -- in terms of prices, these prices [indiscernible] could result in a material percentage to revenue increase around 3% to 4%. It's very hard how long this would continue and also for immediate question on working the cost. We would just probably we can see now how long things would contain before deciding on either changing our proceeding of the direct volume. In general, a 3% to 4% increase in the cost of materials, we will provide our direct classmates. And that's a no change on what [indiscernible]

And can you please give more detail on the level of profitability and the Morocco operation in terms of gross profit margins and operating margin?

We have entirely now 12% of gross profit level for the locally produced materials we see our EBITDA margin currently in the range of 1% to 2%. And we still not on net profit. We expect these numbers going forward to increase our EBITDA margin on gross profit levels, gross profit revenue to reach somewhere between 23% and 25% and EBITDA margin reached close to [indiscernible]

What's your base case guidance for 2026 in terms of volume growth, margins and bottom line?

Okay. Thank you. And we're expecting when it comes to both we're talking about around 26% overall to around 19% are coming due to an increase in volume and 6% are coming from an improved mix -- in general, what we've seen so far that we've been -- since Q1 2025, we witnessing a recovery in terms of volumes, with around 7% growth in volume. Quarter-on-quarter [indiscernible] in Q4, we even a higher number of almost 9% growth in volume. And we expect this trend to continue, given that if we maintain our prices -- and as [indiscernible] has mentioned before, even with the current volatility in terms of prices, we expect that it'll be able to sustain our questions and strategic price points across the different categories throughout 2026. So we are expecting accordingly to continue having this kind of volume recovery, having introduced a lot of [indiscernible] and new introductions and operating across all the categories at higher price points than the average price point of the category we've seen port mix. We've seen in both more and we continue this trend to continue within 2026, so overall.

Can you leave us an update on competitive landscape?

Well, we've seen so far, I mean that most of the [indiscernible] in which we operate, they have been quite stable it was if we look into the [indiscernible] capital for example, the main discussions were in the market were actually the new offering that we reduced opening new problem in to the market, which is the EGP, which was quite progressed. However, its performance throughout the year was very, very deep. And in terms of contract or revenue contribution we contributed to an addition of almost 11% for top line on this category here, I'm referring to the one to office, whether on the single piece or the median offerings. And -- we've seen -- we assume that on competition level, we're seeing that there are no events in the market, but mainly in the [indiscernible] segment which we currently don't operate. We don't have any hope in this segment, which is our [indiscernible]. They offered a big sandwich proposition -- it's not environment digital in any of our current products. And the whole segment has been in the market, it has been stated market. So it's not affecting us or affecting our performance. And when it comes to the ag market, we've seen that, again, we've introduced a lot of renovation to continue to do so in [indiscernible] 2026. In terms of the competitive land has been quite sale. And we believe that the 10 [indiscernible] price point per investment has been growing significantly for different offerings when it comes to competition on this market. I think that things are stable, and therefore, we are able to defend our position for 1 year and maybe go towards the very end of year lightly [indiscernible] we've seen in production from Turkey. I mean [indiscernible], they introduced new role wafer. Our -- this segment is quite memory internal contribution with then our portfolio -- and we still -- the no impact [indiscernible] whatsoever in actually because we operate on the net different prices. So again, the more stable. The main -- it's getting more fragmented, more offers are selling into the market. However, our performance is pain,and we have a lot -- we have a very great regressive roadmap of this segment is -- but when it comes to us, we've been actually seeing that -- on the competitive land, it will be even to be round, we reached almost 46% imported market share last in [indiscernible]. And we're -- we have more capacity [indiscernible] first of all, [indiscernible] in order capacity going forward in order to consider the demand of [indiscernible] saying when it comes to biscuits, I think that the market here of our brand is still a recent one on this one. We're going to keep on introducing innovation, growing our portfolio. The market is somehow have been stable. However, we are dependent on our new innovations going forward and over to increase our presence and grow our competition and market share within this segment and [indiscernible] that we look into the casement, I think that it has been quite stable in terms of competitive and fees and we managed to rectify our operating price increase in 2025 on many of the segments which we operate in when it comes to the [indiscernible] and with soft and what comes to the gene, we were able to upsize to price all missions were erected positively on our gross margins on our profitability and on top line as well. And we are actually enrolling our capacity or refilling certain more in on our widebodies capacity in and then closed in order to prepare the market demand. So we put anything that we are doing last to [indiscernible], we're very confident about all the propositions are offering we currently have in our portfolio. And we will keep on the new relations going forward in order to further grow our market share and one is across the four categories in order.

Okay. We have more questions in the chat box. The first one, if you are keeping prices stable and considering 10% to 15% initial increase in costs, we should expect margins to come down by how much?

An average of 84% during the period of consumption.

Also to say, I think this is a direct impact that we've seen and this is present on light on these numbers going forward. However, as we've seen that there is a lot of volatility. We believe that as prices [indiscernible] this level, we will definitely produce certain moves in order to rectify or to offset this in [indiscernible] material price whether, mainly on by present is a management board and addition to that we have been able to further qualify certain margins for the retailers without touching the consumer price points. And this will be the last -- this would be the case going forward. And action that we're taking on an inventory that we have on some of this that we able would help us to sustain the prices without any move for the product company and then we have more clear, a clearer view on the [indiscernible] and whether we should take in to rectify the side concluded, we are not going to be as to do that. It's a waiting something imminent that we have to know. As Sameh said, we have already secured some inventories, some projects, et cetera and the old prices. So we are not under pressure. Let's all cross our fingers and hope that this situation will need an end soon and then go back to loan business, otherwise, like said, we definitely have the [indiscernible] solution.

Can you give detail on the CapEx for 2026 and a breakdown that happen on the CapEx.

We have a very real CapEx for 2026. We have a total CapEx of around EGP 4 billion. Since the term of this amount is related to capacity, focused on [indiscernible] and Morocco and Iraq. [indiscernible] people plans or environment and the level. The event of net an I think this is the [indiscernible] and the rest are between maintenance caps and smaller than. We worried about the expansion as -- and within the expansion order when we did move the production board [indiscernible] capacity, we have a lot of land and gotten to vision sorting visional building to our [indiscernible]

There are two questions on Iraq operations in the chatbox. -- you're rewarding your expectation for Iraq in light of the current conflict and how are you viewing the planned expansion into Iraq. And what are the risks and opportunities do you anticipate in this market?

Obviously, higher is high profit, let's say, that's what the bad way. Okay, we are very [indiscernible] disappointed situation, we're not expecting this to happen -- so we have the work of past production there, which we already did. And as I said earlier in my [indiscernible] to the result of the end of the year that we the first line of [indiscernible] is already in iteration. Today, we launch the product in the market despite all the [indiscernible] that we give on the [indiscernible]. The [indiscernible] is already installed. We are tuned already there. And one [indiscernible] is currently to the closure of our effort, we will send our teams there to factor online or so. I don't think at this stage, we would order the plans for that are [indiscernible] for Iraq. We see believe that it's a very, very coding opportunity. We have already the market. We are a market leader in the in [indiscernible], and we cannot go with demand by shipping in like a that we are using now part to ship react we have aligned that we've already commissioned forward, let's say, so no permission is already ordered to produce the [indiscernible], which we have a very dominant position in the real market. So at this stage, we have no plan to offer our decision for investment. We still believe it's a good opportunity. Yes, it can with a very high risk, we have the [indiscernible] that's the fact of life, let's see,

Please, can you share what the current capacity and also the level of utilization? I think it's an overall across all segments.

That because it is still very, very young cooperation in most of our segments, we are operating on capacity utilization of the range of 95% currently. Several segments. So yes, across the line rather than 95%. That's why we are expanding. We are buying new improvement in my [indiscernible] and we are investing now in the 8 months you maybe don't know we have both the potent 5,000 square meters with base half of it. Now we are out sale. So we are adding -- we are already on partisan eventually, we will plan on the public to be mined by year end because the action we have to all this, our new wafer line that we already contracted and we work already with this line. So the so that we put capacity on that for many of the segments that we are operating. One of them, as we say mentioned earlier is [indiscernible], we are accessing now acquiring probably new line but it will come by next year because compared weave a very healthy CapEx and a lot of machinery, a lot of installation. We have acceleration in the line people operate by February 27. We have installation in the car. We have a lot of installation in Egypt. So actually, our patio that we are quite easy. But all that reflects that we are running out of as -- and actually, if I can add something to this current part Q1 '26, we've added two volumes that we actually got out of the acquisition that we did in tower we have -- we acquired four lines that had an impact on our [indiscernible] of 15% in February, we started opening 2 out of these lines already, and we're expecting towards the end of Q2 to have a better line operating and it [indiscernible].

We have another question in the chat box. Does the company face difficulties in securing foreign currency?

In somewhat the property has managed well the modern policy. We want to keep it sort bank some hot well gone out of the system. However, that continue to provide for currency for implantation. And as we note initiative where we have our export problems shortages, if any, on a -- how do you see a potential pause in recuts affecting profitability in 2026, given your expansion plans and the impact on financing costs -- when it comes to our current net debt ending '25, we're also pushing EGP [ 267 ] million. with our plans for 2026 the EGP 4 billion of investments, the plan dividend distribution and the working capital financing, we will still see by near term, the net debt of around to EGP 5 billion to EGP 2 billion. So we stand out in a heavy debt position. This others remain close to 4 to equity. So we remain mage. We foresee before the dries were expecting 3% to 5% proven on the industries, now that we review and see how retention the giant consider our goal. However, today, moving away from the local ejection industries, we structured our debt at 60% in former debt and 40% in a different amount. So our net debt on the debt side that will be impacted by changes in egyptian rate are only 40% of our that. So -- in currency, we said that 14% affected will be [indiscernible] with the decline of [ 5% ], we could reach 12.5% affected expense.

A question on the working capital. What is the current raw material stock level? And what's the target in 2026?

We currently apply 3 to 4 months inventory levels for imported materials. We apply a month or less for the local materials. We went significantly higher in 2023 and 2024 with the logistical issues. And then throughout 2025, we reduced the number of days total inventory days for all items went from 70 days to close to 40 days now. I think the current 40 days or 45 days represent a normalized level of inventory that we should keep...

Back to the Moroccan busines, what could be a sustainable margin for the business?

Which side margin for the business. Bear in mind that we don't have to do a P&L is a little bit different we represented and Egypt, of course, directly. So the one that is not on par margin up [indiscernible]

So I think the margin there on our top line already on net sales -- we see on gross profit percent below the group average that would be still comparable to Egypt. So I think a sustainable 23% to 25% gross profit level in Morocco would deliver positive results on the bottom line. We still need to grow our top line. We only have currently one segment, which is the cake segment. We produce the and we need to expand this throughout 2026 to further grow the top line and have a profitable business at the level of 23% to 25%.

On top, we have started also exporting competitor wafer because we not made the way in anticipation to the new production line that ring -- the response of the market is quite well and we're moving there very slowly for patient. But as I said, we are now paving the way for market for the production of the new production line, so it will definitely deliver a better leverage when we produce local.

[Operator Instructions] We have another question in the chat box. What's your target export revenue contribution in 2026?

[indiscernible]

There seems to be no further questions on the line. So a management team. Any closing remarks from your end?

Thank you, -- of course, I'm very, very pleased with the results of 2025. I think it shows how resilient we are and we managed despite that we started the year with difficult in Q1 and Q2. But as a management team, we managed to the position. We have reshaped our portfolio, especially on the segment that were lagging behind, and we managed to recuperate in Q3 and Q4. So I'm very, very pleased with the results. It's not impacted only on top line revenue, but we are also recuperating and improving on the volumes. On top of that, we maintain a very decent net profit and EBITDA margin. I'm also very confident of our Morocco operation there. It will open the door really to export to Western Africa. It sometimes to materialize. I think with the expansion we are doing there and the learning we are getting day by day, I think the operation will start bearing fruit. We need to be a little bit patient and we need to give it some more time. On the other side for Iraq, as I said, I'm very pleased with the operation. I think it was an important move that we did. It's a big market. we have dominant position there. And despite the disturbance that we are seeing, I still believe on the medium and short to medium term, it will be very lucrative also for EBITDA. On another note, we started the year on a very good note. The momentum is still there. We are gaining ground. We have nice for 2026 to deliver on the strategy that we have set from '23, '27. And nowadays, we are working on a new strategy for '27 up to 2030. As I previously mentioned, we want to become $1 billion company revenue by 2030 and definitely will improve our bottom line. So we are in a very good position into the market. We have the new capacity that we have added at a very favorable price that definitely will give us edge against competition. We have the land availability. So we will just build and have eventually by next -- end of next year, additional space capacity to accommodate more lines. All that giving us gives us advantage over our competitors. So I remain optimistic despite being a little bit disappointed with what is happening over the past couple of weeks and the war in the region that we definitely will be impacted. But as I always say, it is a generic problem that will affect us and affect every one of us. I think we do have the means, I mean, to mitigate the impact of that more than anyone else. So let's cross our finger and hope things will get better. Anyway, thank you very much for your confidence in and for joining today, and I wish you all a very happy and then see you by Q4. And maybe we'll see some of you in Dubai if you manage to go to Dubai, probably it has been canceled my colleagues are telling me that it was canceled, unfortunately. So maybe you will come to Egypt, which is and me. Thank you so much, and have a very...

On behalf of CI Capital, I would like to thank Edita's management team for their time and comprehensive responses today, and thank you, everyone, for dialing in. Have a great rest of the day. Bye.