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

[Audio Gap] Manager. Gentlemen, please go ahead.

Thank you, Anna. And before I begin, I would like to over to [indiscernible] exceptional result that was published today that operation there that you have also delivered exceptional result [indiscernible] Good afternoon, ladies and gentlemen. Roadside speaking, thank you for joining our first quarter 2026 result. Most of the figures were with me today, you know the [indiscernible] our group CFO, who have joined the company, [indiscernible] Development of the Finance in the company; and [indiscernible], our Senior Professor nation and Investment Analyst Manager. I'm very pleased to report the strong start of 2026 for EBITDA building on the momentum with which we closed last year. In the first quarter, we delivered revenues of PHP 5.8 billion up 34.7% year-on-year, while the net profit more than doubled to PHP 793 million up 18.1%. This performance repacks not only strong top line growth but also a meaningful improvement in profitability and continued pricing execution. What is particularly encouraging is that the quarter saw another healthy combination of volume growth, continued by nation to high price point and stronger operating metrics. [indiscernible] tax was 18.3% year-on-year to PHP 1 billion, while down to at least 36.7% in 42,000 tonnes. This was supported by strong demand across key categories and reach products. Our core gigs and [indiscernible] segments once again later. with revenue growing 35.1% and 67.7%, respectively, while our more mining segment continue to support diversification, led by [indiscernible] this balanced performance are important strength of our portfolio and our ability to capture growth across [indiscernible] segment and consumer locations. Beyond the quarter, strong financial and operational results, we also continue to make [indiscernible] on our strategic priority. On the portfolio side, we advanced innovation across several categories with new or pack sizes and [indiscernible] consumer preferences and price points. On the industrial side, we will continue to invest behind future demand during the quarter, we commenced operations as one of the key clients acquired in 2 million which was fully ramped up by February and reached full utilization by -- the second taken mine that we acquired in October was fully ramp up by April, reach full utilization during pad, adding border capacity across our vacant segment to support future growth. We also signed our second toll manufacturing agreement we signed in the wafer segment, which will support the Treska platform and broaden our ability to address new subcategories -- and we just launched through this agreement, our nearest as per that we launched previously or in the market. Additionally, we took an important strategic step in January [indiscernible] at August rices and let brand rights across the remaining African market. This expands our long-term additional optionality and reimported our ability to build [indiscernible]. We also continued to scale export, which was more than 33% on a for the quarter, while the outlook still continue to deliver good position and products. [indiscernible] the startup of the cake production line was delayed by the government a [indiscernible] and regulatory procedures, which we have now [indiscernible], which are now finalized with the line becoming operational in March 2026. The vacant line was also delayed to the geopolitical situation in the region, which created cover reception and affected the modernization of keen [indiscernible] while these as [indiscernible], demand in the market remains strong, and we continue to address it through supported by the cancellation of this recession of represent. Our export per ERC increased by 134% in the first quarter, reinforcing our confidence in the long-term opportunity there. We also continue to advance our sustainability agenda. During the quarter, [indiscernible] signed a partnership on ship [indiscernible] plexins wide while in May addition installation, the rooftop photo-type solar panel system at our [indiscernible], including our lifted building, the central supply chain [indiscernible] and the central research and innovation. This initiative will pan out for different reports in the leaner operation, operating requirements and reducing the current of our [indiscernible], and I'm back to [indiscernible] go through innovation. [indiscernible] which reached 5.7 [indiscernible]. At the same level, performance was [indiscernible] by our core categories. Sales revenues increased 36% year-on-year to GBP 3.1 billion, while Cross-Sound delivered even stronger growth rising of 68%, GBP 1 billion to GBP 6 billion. Among the [indiscernible] settlements, [indiscernible] and [indiscernible] also recorded strong revenue growth of 57% and [indiscernible] respectively. Gross profit reported a 41% year-on-year increase to GBP 2 billion, with gross margin expanding from 59% -- 35% from 31.6%, Q1 '25. This was supported by slower comp growth relative to revenue as well as the improved [indiscernible] across 3 components. More specifically, cost of values declined 7% of revenue from 5.2% in the prior year cost, while manufacturing perhaps improved to 10% of revenue from 10.3%. SG&T remains well knowledged despite continued commercial investment. Total SG&T including selling distribution, advertising and marketing and administrative expenses increased 45% year-on-year to INR 5 billion, representing 18.2% of sales from that 6.1% in Q1 2025. The increase was mainly driven by higher selling in expenses as well as greater advertising the market and support behind in generation and product [indiscernible] despite the EBITDA continued to fall strong EBITDA rose 52% year-on-year to GBP 110 million with margin improving to 83% from 16.2% the prior quarter in the prior year quarter, reflecting stronger gross margin dynamics and the company's ability to convert top line growth into here. Net profit also accelerated sharply increasing 1.8% year-on-year to 793 million tonnes. Net margin reached 13.7% compared to 8.9% in Q1. This strong [indiscernible] performance was supported by revenue growth, margin expenditure and significantly higher intestine. On the regional drugs, net ascent sales reached by GBP [indiscernible] Q1 '26, up 73% year-on-year and representing 9.5% of total revenues. We need to deliver [indiscernible] of GBP 175 million, up 21% year-on-year, reflecting continued operational progress in state distribution. Our balance sheet perspective as of 31st of March 26, hold a net cash position of GBP 853 million compared to a net cash position of GBP 166 million at year end '25. Cash and bank balances stood at [indiscernible] million at the end of one. And the [indiscernible] GBP 55 billion end of March compared to $2.3 million at year-end [indiscernible]. We play the most [indiscernible], GBP 328 million, up from GBP 443 million at the end of the [indiscernible] Total CapEx for the period ended 31st of March 26, amounted to GBP 290 million, primarily accreted to expansion-related investments and upside maintenance and [indiscernible]. Overall, the first quarter of 2026, demonstrated our ability to sustain the strong momentum established in the later part of last year. stating healthy demand and volume growth and meaningful margin expansion and bottom line performance. With that, we open the floor for the questions.

Yes. Thank you so much for your presentation. [Operator Instructions]. There is a question from Habib Ahmad in the chat box asking, can you please provide some guidance for 2026 earnings and sales?

Sorry, can you repeat the first thing in the guidance for?

2026 earnings and sales.

Thank you for this question. We're expecting a on this year will unlock the low being between GBP 26 million and GBP 27 million [indiscernible]

Okay. And I see Harry has his hand raised. Harry, go ahead. So there's another question just asking to repeat the guidance figure for revenue that was just mentioned between GBP 26 billion and GBP 27 billion. Harry, your line is open. Just unmute from your side, please. Will you be providing a net income guidance figure.

The net income is timely our dues on the margin in the range of 10% to 11%. Yes, answer your question?

Yes, that's clear. Thank you. Maybe until we put some more questions to come in, if I may ask a quick question. If you could give some context on the improvement in interest income during the quarter. And if you have a particular expectation for your net debt outlook or your leverage outlook for the year, please?

On the interest income and the success part, do we have different factors. Starting with the interest income part from who we have been coming some capital in the last period large base for the translation of the interest. We may have been focused on investing in the count treasury business with different maturities to endure at the current high net of business [indiscernible] product. We still keep a portion of the cash in dollar sales to it any balance sheet exposure on FX fluctuations. In terms of interest expense, then I think the effective interest rate for our investment is around 18% to 19% and [indiscernible] So the interest expense, I think we manage as well to maintain 60% of our total debt in foreign currency and probably an average of 7%--6% to 7% [indiscernible] slightly in [indiscernible] probably an average of 19% -- 20%. This will yield an effective interest expense of [indiscernible] so based not on changing with our mix of debt cash between foreign currency and local currency. We managed to improve the interest income in expense ratios. Talking about our net debt position throughout the year. We have 1 wind and 850 million of cash position we expect. So first, we have indeed the payment of our dividend of [indiscernible] million as announced. We have the plan on investments of around 4 billion. And this will drive on top of the operation and then the for. And we expect to have the net debt somewhere between GBP 1.5 billion to GBP 2 billion by end This, I think, will be around going to further debt to equity ratio.

That's very clear. Harry, I believe you should be able to go ahead, now.

Okay. Can you hear me okay?

Yes. Please go ahead.

Sorry, I couldn't met from my side. Yes, thanks for the call. Just get a bit more color on the growth aspirations, I think you said $26 billion to $27 billion, which implies a bit of a slowdown given the growth in the first quarter. Could you just maybe flesh out what you're anticipating in terms of by volume and then price and whether there's any categories that you're expecting to underperform or outperform

Okay. Okay. Thank you for this question. If you look into our performance [indiscernible], we see that we've been witnessing a very significant volume recovery across all categories. Our total volume on group level has been growing by only 7% quarter-on-quarter and from starting 2025. And in Q4, it was 9%. Definitely in Q1, we had a bit of slowdown due to business [indiscernible]However, this as we speak, we see that this has been rectified after the [indiscernible]. So we expect this trend of growing growth in demand in terms of volume. That was on until the rest of the year to end upward volume growth over the past year of around 15% in quote, which is quite significant and much faster than the rest of the market or we got in taking with the. And if we look in terms of the tonnage, I think this quarter compared to last quarter was a period last year, we see a growth of around 36%. And you have been talking [indiscernible] I refer to is maybe in terms of number of units or number of measures. However, the -- if we look at tonnage format, 36% versus the same period last year. which is quite significant. And again, it's way ahead of the rest of the market. The good thing that it's reflected, as I mentioned, among all of our core categories. And this is why we have a very -- I guess, [indiscernible] this year in order to actually be this kind of growth and this kind of demand that we onion the market. And definitely, these projections are given that we do not have any major disturbance on geopolitical level within the region.

Just to just have a follow-on question to that. So you grew 35% revenue with 18% PAT growth, and you're expecting the PAT growth probably to slow down a bit to 15% for the full year. It still seems like like if we continue at current rates, you way overachieved your 26% to 27%. Is that right? Or have I misunderstood?

Okay. So let me clarify one thing Yes, the 15% is in volume in terms of tonnage. [indiscernible]. Sorry sorry. sorry, I confused you. The 15% is in volume in terms of upper occupancies. However, third to intone I said 36% is improve growth in tonnage in Q1 2026 versus the same period last year versus Q1 2025.

Yes. And tax this quarter grew 18%.

In this quarter, it was 18%. However, it varies in terms of mix. So we expect that the full year will normalize around 15%

Okay. I seem to remember the base was quite impacting the first quarter of 25%. So is it that the base is getting more challenging for the rest of the year?

Definitely, we come from a lower base. But as I mentioned, that we are currently putting a lot and that's why we're adding capacity, and we're -- in some cases, we had to prioritize and we have the demanded for more sales, however, we have to prioritize between our life ports or local demand so now that we're adding capacity and increasing capacity maybe again across our 4 categories, so and in cases, we expect that we will be also able to further grow the volume and [indiscernible] the coming quarters [indiscernible] we see a lot of demand. And actually, this again, adding to this, we're also improving our mix. And we're expecting, as I mentioned, the wrong, a good increase in volume by 15%. However, there is an improvement in terms of pricing in terms of next year reflected in order to reach the revenue of the 27 billion.

Okay. And my second question is just related to costs and profitability. I think you mentioned in the last call that you're seeing kind of 10% to 15% increase in costs and just wondering how that's evolved now and whether you'll be taking any price increases because this will likely have some impact to margins?

Okay. To answer you on this one, definitely, we've seen that the row and part materials have increased the costs reflecting the geopolitical situation in general and the certain scarcity, the increase in pre costs or prices it was all reflected definitely started to get reflected in our role and back material costs. We anticipate a full impact from [indiscernible] However, we are implementing as we usually group, we're into implementing a mix of indirect price increases, very bear in mind that price increases and very specific categories and not in major SKUs in terms of contribution. And definitely, it will -- we might also include certain improvement in retail margins that we offer. So this in order to combine all these tactics will help us in reducing the impact and actually mitigating the impact that we're getting from increased costs.

Okay.I was just going to say, given the margin that you did last year, like what should we think about as a baseline for 2026, maybe on EBITDA or EBIT level?

We still definitely versus instead then that we will be able to maintain our margins on Aveda. And as I mentioned, we will be able to either plan to mitigate when it comes to the increase in costs coming from the raw impact to mitigate most of these increases throughout the food initiatives that we're implementing on our pricing structure.

Okay. So similar margins, you're saying?

Yes, more or less

We have a couple of questions in the chat box that relate around what we were just discussing. So I'll read them out. And if there's any additional comments, please feel free to cover those in. So it's [indiscernible]He's asking how have costs for key commodity prices evolved since the close of the quarter such as wheat and what proportion of costs are USD denominated and if you are currently hedged and how we should think of the evolution of gross profit in a particular environment, keeping in mind higher costs in general.

For the cost -- the price evolution, and talking specifically about 2 weeks for the question, I think so far, prices on weekly work quite steel. I think the stocks in Egypt did not allow an [indiscernible] and the sourcing press. We don't have long-term contracts for our flower consumption. and with some exceptional materials, specifically the oil related materials such as to the package room. I think the leases reached close to 100% of business prices. that's impacted by oil prices going up, impacted by the Egyptian pound devalued by around 15%. And in part was led by sourcing of the raw materials from the CCC because of the geopolitical situation. And the second part of the question was related to the dollar component. We have around 20% of imported materials and is directly dollar-related, another 20%. So the total 50% of our material are old 100% impact to the dollar. There is any other questions?

And he went also asked if the company is deploying strategies to mitigate the impact on margins, maybe other than price migrations that you had mentioned?

Already Covered this point for you.

Great. And then Sara Gabriel was asking specifically about your view on cocoa price trends going forward and how these affect your business operations and margins, please?

Coal prices. I think they have reached $11,000, and we've seen them declining to 7 to 5. And I think now it went down to around $4,000 a ton. So I think this offset part of the price increases that we've seen in the last I think the high cocoa is back, but the trend now after [indiscernible]

That's clear. [indiscernible] asks, if you can please provide more clarity on the guidance at the low end of the guidance of 26 billion in revenues and 10% net margin imply lower figures than the trailing 12 months.

Can we start with the [indiscernible] for the top line, and then we go to the next [indiscernible] the first one of the 27 million. [indiscernible] repeat the question, please?

Sure. Can you please provide more clarity on the guidance as the low end suggests or implies a net income that is lower than the trailing 12 months' net income. Okay. So when we spoke about online of 10% to 11%. So out of the 26-27, we will be taking around roughly 2.8 million, 2.9 million, and that's around 15% led than the currently. This includes the impact of the prices that we've seen currently. So yes, we have mitigation plans to offset the price increase in our materials, but we will not fully ship this to the consumer.

Thank you. There's a question from [indiscernible] who asks, do you think quarter 2 will be like quarter 1.

[indiscernible] Be better figures because we recover from the seasonality of Ramadan it could be a higher contribution on the top [indiscernible]

From what we see, especially during the month of April [indiscernible] that 1 moving by direction of amount behind our back. Despite of Ramadan [indiscernible] group members. So we are expecting these beds will motivate situation that we were delivering on this long quarters, especially that we move very fast to mitigate the risk of the cost increase, whether for the digital and in or the price of commodity, especially the packaging material growth on the visas the everything will be stable and -- and you can 1 and some sort of confidence to [indiscernible] we or the went the same so the volume go versus last year than what this year will be a record breaking in as of on the number of options that would be in the U.S. well also said on this, we have a great improvement in terms of mix that can out more on migrating to higher price points, we live better on our profitability and margin. And this will help us it's another certain thing that we have to mitigate any kind of turbulence that we see in terms of increasing cost of [indiscernible] back. Thank you.

Thank you. [indiscernible] is asking if any of your capacity or production facilities, have they been subject to restrictions and operating hours. Actually, most of our line now, we work on Friday. So we almost worked 24/7 or most of the mandatory, especially on the other gig and the North and the rest Unfortunately, now we don't have any small and that is not the [indiscernible] 4 million we have included the construction of the new expansion -- the expansion of the [indiscernible] factor. The [indiscernible] factor is [indiscernible] square meter, probably that we did a in 2018, 2019, when we decided the remaining of the because of the devaluation of the decision on recovery at ever happened. And nowadays, we have no more capacity. So no other place spaces to add additional life. And that's why we're very contracted for the transaction expansion that we did addition and, if I'm not mistaken, 6 to 8 production line debt. We have 1 -- we have 1 [indiscernible] is on ground, but we will install there. We have 1 plus online that we will also install there. So this would give us a more edition production line, increase our capacity and see what we can or had.

So it's a good problem to have. The challenge now is to be capacity to the [indiscernible]

Yes. I think , I think if the question is referred to the fact that due to the recession that we imported pay from the government regarding the energy consumption [indiscernible] that's the main -- in the question, but actually, we didn't have any restriction to stop any of our facilities or production or -- and we did not mean any kind of restriction [indiscernible] energy consumption or any direction to top operation [indiscernible] that was on for [indiscernible] at all. And we have -- as any mentioned, we have all our facilities operating almost 24/7, the question I'm sorry.

Thank you. I think that's here right now. So if you don't mind, I'll move over to a couple of questions on Iraq. Maybe it will be easier if I ask them 1 by one. So the first one is if you could please provide your current and planned capacity in tonnes in Iraq and how that translates to 2026 and 2027 sales in USD terms, please?

So our current production at our current utilization is product capacity is around 11,000 tonnes for both long-term line, not having a new line to be operating as of next year, we will envision [indiscernible] 5,000 [indiscernible] this capacity should be utilizational next year of close to 8%.

And if you could please provide some color on EBIT -- expected EBITDA margin for Iraq?

The current field way lower than our roots because of the startup ratios during the start-up. We understand and this should rise additional at this year compare next year to come close to the normal in the down.

And also on Iraq, how has the operating environment evolved in the first during the first quarter of 2026 versus the second quarter or current days? And what is the contribution -- what is the expected contribution of Iraq total revenue percentage terms?

I think the one we faced some delays on growing our production line. And I think -- we have turned the delays on the [indiscernible] there because of the geopolitical situation. We have to evacuate our local team during March [indiscernible] and they have to stay in Egypt will not many posed our teams for the commissioning of the in the training there. We were able to send them back once the net was in mid-April. And I think now, I think a line new production and we're in full operation after so let's say, [indiscernible], the lines will be fully [indiscernible] what other part of the question?

Yes. And the last 2 questions I see at the moment are on CapEx. If you can provide us with your CapEx guidance for 2026, please? We spoke about the GBP 4 billion of CapEx for 2026. Now to please come out. [indiscernible] are expansion, 15% of our working environment related, and the rest are the sustainability and [indiscernible] we had in Q1 [indiscernible] of CapEx that is when we have [indiscernible] made for the capital to come [indiscernible] so in Q1, we paid GBP 1 billion out of the GBP 2 billion out of the total 4 billion plan for '26.

That's absolutely clear. At the moment, I see no additional questions in the queue. Sorry, one just came in from Geric who asks what is the normalized level of SG&A as a percentage of revenue?

I think we have 18% last year at 16% Q1 add extra marketing spending that will normalize throughout the year. So we rolled down to almost 16%, 17% SG&A [indiscernible]

There's a question on -- from Anup on your debt. If the company plans to change the composition of that in terms of FX versus local?

To change the 60-40?

Yes.

I think for the third being a filing the 60-40, we believe the balance sheet is to tee in terms of currency exposure between foreign debt and in the post out for that is used to support our international operation. And thus, the dollar debt is timed to a dollar asset. So we are firing with the exposure. reports that are not covered to foreign assets are covered to foreign balances in USP didn't need. So I think we are -- in this structure until we see the Egyptian power with interest rates fall down, became from center shifting and getting more reliance from the giant debt.

Thank you very much. We have a follow-up question from Habib Ahmad, who asks if you could provide CapEx guidance for next year 2027.

I think that would be too early.

Understood. [Operator Instructions] It appears we have no additional questions. I'll hand it back to you, gentlemen, for any concluding remarks, please. Thank you, [indiscernible] when Personal and my team are very pleased with the results of Q1 2026 that we see, as we mentioned, in our conversation today and has seen the question, the demand is there. We are running very fast actually the market. We have this structure our portfolio, our pricing very at least also see our core segment continue to deliver growth and our mixing category also to material slowing slowly. We are expecting if things normalize without any but balances in the region. That situation will continue to improve. As you see, the weakening of the Egyptian pound and the commodity some of the commodity that we hit due to the price of petrol. We hope the situation will leaseback and that we will continue monitoring but anyway, we have all the resources. We have all the deals. We have been through that there were so many times and so in over the last decade, we have Phase I even more aggressive situation. So we know how [indiscernible]. That's what I'm trying to say that even with the pressure that we see on commodity, immediately, we have immediately, and I say we acted to have the get the risk of the cost increase to enter bottom line. So finger cross, things continue. We hope to talk to you in quarter 2 with a solid result also that will drive us till the end of the year with a remarkable in China. Thank you very much for joining the call, and I will like to wish everyone who is celebrating [Foreign Language] very happy eid. And a very nice [indiscernible]. The government is very generous with [indiscernible] holidays, and that's put another challenge on us because we need to work our factory in the order to deliver good one. So happy eid everyone, and thank you for joining today's call.

Thank you.

Thank you to the participants for taking the time today. This concludes today's call. You can now disconnect.