Edita posts loss as higher inflation, interest costs bite - Just Food
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Edita posts loss as higher inflation, interest costs bite

27 Jul 2017

Egypt's Edita Food Industries turned to a loss in the second quarter after higher inflation pushed up costs and interest expenses weighed on profits.

Edita posts loss as higher inflation, interest costs bite

Egypt’s Edita Food Industries turned to a loss in the second quarter after higher inflation pushed up costs and interest expenses weighed on profits.

The company posted a net loss of EGP1.7m (US$95,000) in the three months through June, compared with a profit of EGP41.6m a year earlier, according to results published yesterday (26 July).

Edita blamed the Egyptian government’s introduction of a value-added tax and the partial lifting of energy subsidies as key factors that pushed up costs and weighed on bottom-line earnings. The float of the Egyptian pound in 2016, which has raised import prices and domestic inputs with a foreign currency component, was seen as another factor.

Earnings before interest, taxes, depreciation and amortization, or EBITDA, took a huge hit, dropping 55% to EGP43m during the second quarter from a year earlier.

Revenue was up 11.2% at EGP611.6m, despite seasonal adjustments related to the holy month of Ramadan in June. The El Sheikh Zayed, Egypt-based maker of packaged snacks under brands such as Molto, Tiger Tail and Twinkies, saw sales growth of 20% in its cakes segment and more than 100% for the wafers sector. However, its market for rusks dropped 6.9%.

The company’s higher interest expenses were driven by the tightening of the central bank’s monetary policy by 3 percentage points in November 2016 following the float of the Egyptian pound, according to the statement. For the quarter, those costs climbed 92.6% to EGP27.7m.