Earnings Call: Q2 2026

Sep 21, 2026

Summary

Q2 revenue and net profit grew 30.5% and 31.1%, respectively, with broad segment growth and stable gross margin. FY 2026 guidance remains on track as capacity and regional investment ramp up.

Hello, everyone. This is Hatem Alaa from EFG Hermes, and welcome to Edita's second quarter 2026 results call. I am pleased to have on the call today from Edita, Hani Berzi, Chairman and Group CEO, Sameh Naguib, Deputy Group CEO, Ahmed Samy, CEO Egypt, and Omar ElAbhar, IR Senior Manager. We will start by some comments from management, and then we will open the floor for your questions. As an initial reminder, to ask a question, you can either type it in the Q&A chat box or you can click on the raise hand button. Gentlemen, please go ahead. Good afternoon, ladies and gentlemen. This is Hani Berzi speaking, and thank you for joining our second quarter 2026 result call. Let me first begin by thanking Hatem Alaa from EFG Hermes for hosting us today. Like he said, I have with me Sameh Naguib, the Deputy Group CEO. I have Ahmed Samy, the CEO of Egypt, and Omar ElAbhar, our Senior Investor Relation and Investment Analyst Manager. As we close the first six months of the year, we are pleased with the strong momentum sustained year to date and what is shaping to be another record year for Edita. Revenue grew 30.5% year-on-year in the second quarter to EGP 6.5 billion, while net profit increased 31% to EGP 707 million, with a healthy margin of 10.9%. For the first half, revenue reached EGP 12.3 billion, up 32.5% year-on-year, while net profit increased by a strong 63% to EGP 1.5 billion, with net margin widening from 9.9% in first half 2025 to 12.2%. This growth was not driven by a single lever, but reflects the combination of stronger demand, disciplined price point management, and continued execution across segments. Total pack sold increased 16.6% year-on-year in the second quarter, while tons sold grew 23.9%, alongside a 12% increase in average price point per pack to EGP 6.14, underscoring the balanced contribution of volume growth and continued migration toward higher value price points. What gives us additional confidence is that the momentum was growth-based across our segment. Cakes and bakery continue to lead growth, with revenue increasing 30% and 42.5% year-on-year respectively, while candy and biscuit also deliver strong growth of 37.3% and 32.4%. Particularly encouraging is the continued development of our frozen segment, where revenue grew 33.6% year-on-year. We are developing Forni through both B2B and B2C channels, with the strategic B2B partnership adding commercial momentum, while on the consumer side, we are refining the proposition through a more focused SKU portfolio, higher value offering, and improved packaging based on the market learning we have accumulated since launch and supported by progress across both B2B and B2C channels. Innovation remains at the heart of Edita's continued performance. During the quarter, we introduced Molto Gold in bakery, a premium butter croissant positioned at the category highest price point of EGP 20 per pack. We also launched new offering in cake and wafer, further building on our strategy of strengthening our brand, broadening consumer choice, and our presence across higher value propositions. Together, this broad-based performance across our segment demonstrate the strength of our core business while highlighting the progress we are making in building additional growth engines across the portfolio. On the industrial side, we continue to bring additional capacity online to support demand. One of the bakery line acquired in October 2025 was fully ramped up by April and reached full utilization during the second quarter. This is the second of the four acquired production lines to become fully operational and fully utilized, following the cake line ramp up during the first quarter, which serve as testament to the strong demand. Additionally, the third of the four acquired lines in October, also dedicated to bakery, is currently under installation. In parallel, and as part of our planned CapEx program, we have ordered three new production line for Egypt, one for Morocco, and one for Iraq, further expanding our capacity platform across both our home market and regional operation. These addition strengthen capacity in our core category and give us further headroom to capture growth in the market. Regionally, Iraq remains an important pillar of our expansion strategy. Local cake production, our newly introduced segment in the market, commenced toward the end of March and generated EGP 72.5 million in revenue during the second quarter. Following the close of the reporting period, our second local production line in Iraq, dedicated to bakery, also commenced operation in July and is running at full capacity. This marks another step in moving our Iraqi platform from market development toward the broader local manufacturing presence. Our wide regional platform also continued to progress. Net export sales grew 38.3% year-on-year in the second quarter, while we continued to build our presence in Morocco, with first half revenue increasing 7.2% year-on-year. The combination of export, local manufacturing, and expanded brand rights across Africa give us multiple routes to scale Edita beyond Egypt in a disciplined manner. Sustainability is also becoming increasingly embedded in how we invest and operate. In May, we started installation a rooftop solar photovoltaic system at our Sheikh Zayed headquarters with approximately 390 kW peak of installed capacity. In July, we were also awarded ISO 50001:2018 certification for energy management system, our fifth ISO certification, covering five of Edita's Egypt six factories. This provide us with an internationally recognized framework to systematically measure, benchmark, and improve energy performance across our operation. Both of these initiatives support our focus on improving energy efficiency and reducing our environmental footprint as the business scaled. Overall, we enter the second half of the year with confidence. We have healthy demand, stronger volume, additional capacity coming online, a broader portfolio, and a regional platform that continue to advance. Our focus remain on converting these opportunity into sustainable and profitable growth while maintaining the pricing, cost, and execution discipline that has supported our performance. With that, I will now hand over to Sameh to walk you through the financial highlights before we open the floor for question. Sameh, can you please take the lead? Thank you, Hany. Good afternoon, everyone. Let me take you through the key financial highlights for the second quarter of 2026. Revenues reached EGP 6.5 billion in Q2 2026, up 30.5% year-on-year, supported by strong underlying volumes, healthy demand across our key categories, and continued portfolio migration to higher price points. This brought first half revenues to EGP 12.3 billion, up 32.5% year-on-year. Operationally, total packs sold increased 16.6% year-on-year to 1.1 billion in the second quarter, while tons sold rose 23.9% to 44.5 thousand tons. Average price per pack increased 12% year-on-year to EGP 6.14, demonstrating the balanced contribution of volume growth and continued price point migration. At the segment level, our core categories remain the main growth engines. Cakes revenues increased 30% year-on-year to EGP 3.4 billion, while bakery revenues rose 42.4% to EGP 1.9 billion. Across our nascent segments, candy grew 37.3%, biscuits increased 32.4%, wafers returned to growth with a 14.5% increase, and frozen revenues rose 33.6% year-on-year. Gross profit increased 29.8% year-on-year to EGP 2.1 billion in the second quarter, with gross margin broadly stable at 33% compared to 33.2% in Q2 2025. Direct materials costs stood at 56.1% of revenue, manufacturing overheads at 9.7%, while industrial depreciation declined to 1.2% of sales from 1.5% in the prior year quarter. SG&A remained well controlled relative to the pace of revenue growth, increasing 29.8% year-on-year to approximately EGP 1.1 billion, and representing 16.4% of sales compared to 16.5% in Q2 2025. EBITDA increased 30% year-on-year to EGP 1.2 billion, with margin broadly stable at 18.1% compared to 18.2% in the prior year quarter. Net profit increased 31.1% year-on-year to EGP 707 million in Q2 2026, with net margin holding steady at 10.9%. For the first half, net profit reached EGP 1.5 billion, up 63% year-on-year, supported by continued revenue growth, improved operating profitability, and significantly higher interest income. On the regional front, net export sales reached EGP 624 million in the second quarter, up 38% year-on-year and representing 9.6% of revenues. In Iraq, as Hany mentioned, local cake production commenced towards the end of March and generated EGP 72.5 million in revenues during the second quarter. Morocco continued to progress as we further develop our presence in the market. From a balance sheet perspective, cash and bank balances stood at EGP 5.2 billion as of 30th of June 2026. Gross debt stood at EGP 5.7 billion, resulting in a net debt position of EGP 440 million compared to a net cash position of EGP 266 million at year-end 2025. Inventories stood at EGP 2.8 billion at the end of June compared to EGP 2.3 billion at year-end 2025, while trade and notes receivable reached EGP 374 million compared to EGP 243 million at the end of December. Total CapEx for the six-month period ended 30th of June 2026 amounted to approximately EGP 726 million, primarily allocated to planned expansions and production lines. Overall, the second quarter demonstrated the continued strength of demand and our ability to translate volume growth and portfolio migration into sustained profitability while continuing to invest behind future growth. With that, we open the floor to your questions. Thank you. Hatem, can you open the floor for questions? Thank you. Thank you. To ask a question, you can either type it in the chat box or you can click on the raise hand button and I will unmute your line. Again, you can either type your question in the chat or click on the raise hand button. We will take the first question from the line of Tanishq Holt. Tanishq, please unmute yourself. Good afternoon, and thank you for taking the time, and also congratulations on a pretty strong result. Just two questions from my side. The first one is income statement related. During, say, late March, April, and May, the EGP weakened somewhat. Can you give us a feel of what you guys expect of your EGP margins in Q3 and Q4? Are you guys sitting on inventory acquired at a weaker EGP that could put pressure on EGP margins, or are you comfortable that with the pricing that you have and the volumes that you can achieve, that you can pretty much defend the EGP margin level you delivered in Q2? My second question, you mentioned some unutilized capacity in passing during the commentary just now. Can you give us a reminder again as to how much headroom you guys have across your key categories or unutilized capacity that you should be treating as upside potential? Thank you. Thank you, Tanishq. Thank you very much for also congratulating the team for these strong results. On the income statement point, I will have Sameh comment, but just to give some comfort on the gross profit margin, that is a continuous process that we keep on looking with the team. I do not want to say week by week, but whenever we feel that there is an inflation due to depreciation or appreciation of the EGP, or whether because of the regional tension that could add additional cost to our raw material, whether in logistic or whether in demand like we have seen, or a hike in any commodity like we have seen with cocoa powder over the past couple of years. This is something that we overlook very carefully, just to make sure that we maintain our margin within the healthy range that we would like them to be in order to be able to deliver, I mean, the net results that we are expecting and what we are budgeting for. Sameh, would you like to shed some light further on what will the expectation for the Q3 and Q4 when it comes to gross profit margin? I do not think there is any changes of what we are seeing today, unless something unusual happens. Correct, Sameh? Correct. Correct. I think what we have seen so far, Hany, and Tanashi as well, thank you, that Q2 already reflects the impact of change in material prices and the devaluation. We went from 47% in the Q1 to ranging somewhere between 49% and 51%, maybe at the peak at 52%. And what you have seen throughout the quarter compared to the same quarter last year, a total increase of 14% in the cost, 12% related to price increases and 2% in relation to the FX. I think we will continue seeing currency fluctuation till the end of the year or until we see more stability in the region. But I think our view is we will maintain the 50%, 52% max on the FX during the second half of the year. This will not have a significant impact on our total costs or our gross profit, as we will keep watching and adjusting maybe slightly the weights to maintain the profitability at the 33% currently. I think for the second part in relation to the capacity utilization, I leave Ahmed Samy to take this one. Thank you. Thank you, Sameh. Thank you, Sameh. I think, just adding to what you have been saying, definitely when it comes to gross margins, as you just mentioned, we have seen that lately with all the geopolitical pressure that we have encountered, that we have been able to manage perfectly our propositions in order not to get a hit on gross margins whatsoever. And lately, if we look into the projections that we have also from supply chain level on the price of the different commodities, we tend to see that there has been some sort of ease in the projections and that numbers are. With the initiatives, we have been able to continue on doing our pricing without any. This capacity increases that are definitely required. We've had a previous acquisition of four different lines for bakery and cakes from another food conglomerate, and two of which are already operational, and the third one will get to operate by Q4, which will enable us more, will add another additional capacity of around 10%-15% on bakery specifically, as we're running almost at full utilization currently. Moreover, we're planning for 2027 to have another heavy year in terms of investment, in terms of CapEx. We are introducing an extension to one of our existing plants in Polaris Al-Zamil. We're introducing a new production hall that will be able to accommodate around six to seven production lines, out of which four are planned to be effective in 2027. Definitely, the good news that we're having a very solid plan in order to increase our capacity, and that will enable us to continue meeting the demand in the coming half in 2026 and going forward in 2027, Inshallah. Thank you. Thank you, Essam. Like you said exactly, Mostafa, Essam, we have pre-poned the CapEx this year. We are building the extension of our E08 facility. That's a net plot of land of 25,000 sq m to accommodate the new lines, some of the new lines that will be delivered by Q4 and Q1 2027. Thank you, Tanishq. I hope we covered your question. Understood and appreciated. Thank you. Take the next question from the line of Varuna Kumaraj. Varuna, please unmute yourself. Hello. Hi, good afternoon. Good afternoon. Hi. This is Varuna Kumaraj. I am from SICO Bahrain. Thank you for the opportunity, and congratulations on the results. I have three questions. The first question is related to the FX loss that you reported in the income statement of EGP 73.5 million. I will appreciate if you can give some color on that, and what was the main driver behind that item? That is my first question, if you can elaborate on that. Secondly, in terms of the Iraqi operation, I want to know, do you have any kind of medium-term targets? Say, where do you want to reach in the next two to three years? And the last question is on Morocco. In terms of top line, there was a significant ramp-up in 2025, but last few quarters, it kind of tapered off in terms of growth. So what are your expectations in the Moroccan operation? Thank you. Thank you very much, Varuna Kumaraj. Sameh Naguib, can you take the lead on this answering on the FX loss issue? Then we can elaborate together on the next two and three, second and third question. Sure. For the FX loss, we are keeping some currency, some dollar balances on our balance sheet. We are net positive in foreign currency, around $20 million. We have this position in anticipation of our regional expansion plan. However, you will see with the variation on our FX exchange rates in Egypt, going from the 47 to the 53, 52, going down to the 50, we see gains and losses on these amounts. We have, I think, around 45 million gain in Q1, offset by 73 million loss in Q2. So a net position of 25, 30 million for H1, which will certainly keep on fluctuating until we go into the effective investment in our regional plan. So that is the FX part. For Iraq, Hani Berzi, would you like to start? No, no, go ahead, yes, Sameh Naguib. Okay. For Iraq, I think we are quite happy with the stage where we are in now. We have our cake line in operation, and we started sales and introducing our new brand, Momo's, locally. In July, as Hani Berzi said in the introduction, we have ramped up our production capacity for the bakery line, and now it is on track, and we see significant demand that we still have to serve from the Egyptian operations by export until we can increase our capacity there. We have heavy expansion plans still planned for Iraq, with an additional production hall and two additional lines to arrive somewhere between end of this year and end of 2028 to complete the capacity, and then we will start looking at probably additional lines, depending on which segments will grow even faster. We are quite bullish on what we see in the market. The brands are quite strong. Our distribution channel is as well established within the different regions in Iraq. We had a couple of delays because of the regional geopolitical situation. Now things are still a bit difficult, but way manageable, which will allow us to continue our investment plans. I think we see Iraq growing in volume and top line. However, we see as well positively that Egypt as well is still growing at even a higher rate. I think Iraq would remain probably on the, within two, three years at the 7% of our total top line. We are very pleased with the Iraqi operation. I know it is very challenging country to work in. However, because we have established the brand, mainly Molto and Tiger Tail brands many, many years ago, it was much easier to enter the market replacing importation by local production. However, the line is, as we mentioned on the call, the croissant line is running at full capacity, so we produce only one SKU, and we serve the market with additional SKUs that are needed from Egypt. Eventually, crossing finger, we see a great potential in Iraq, like Sameh said. You want to elaborate on Morocco or Sameh? Yeah, sure. For Morocco, we have seen a drop in 2025, and we see we are still growing in the Moroccan market, however, at a slower pace, despite the different launches that we had during the year. I think we identified our main challenges on revising and improving our route to market strategy, which we are currently in the process of implementation and moving to a better coverage throughout the different regions in Morocco, which will allow to come back with a significant and more attractive growth rates for our operation there. We as well look to expanding in an additional segment that should as well add to the top line locally in Morocco. Thank you. Okay. Thank you. Just if I may ask one follow-up question related to the FX loss. As you mentioned, it is related to the dollar balance that you keep. You said it is around $20 million. I just want to get an idea as to what is your plan. I mean, are you going to maintain this balance, or are you utilizing this going forward? What is basically your plan regarding this currency basically? Sure. We usually do not like to keep foreign currency balances, and we prefer to have our balance sheet as more or less break-even on currency exposure. So we maintain usually the foreign currency balances in relation to the total exposure on the balance sheet. However, currently, as we are looking for regional expansion, we need to keep some additional dollars for the planned investments, and this is why we have currently these $20 million. Given the Sorry. Given your aggressive expansion plan, is it fair to assume that you will maintain this strategy until 2027? No, once we start investing in the regional expansion plan, then these balances will significantly go down and have a neutral balance sheet in terms of exposure, more or less neutral, yeah. Oh, okay. Thank you very much. Thank you. Thank you. Thank you, Arun. Okay. As a reminder, to ask a question, you can type it in the chat or click on the raise hand button. I will take questions from the chat. There is a question from Salma Abdelhay. Your guidance for 2026 CapEx was EGP 4 billion. Given that the reported CapEx in H1 2026 was only EGP 1 billion, has the full year guidance been revised downwards, or should we expect remaining CapEx to be incurred in the second half of the year? We will Thank you, Salma Abdelhay. Please go ahead. Yes, we will definitely spend the CapEx, but Sameh Naguib, please elaborate in detail. Sure. We still maintain our EGP 4 billion, more or less, target CapEx for 2026. As you expect that the production lines will take a long lead time, we placed our orders since end of last year, beginning of this year. We expect to receive most of these lines by end of this year, which will show the remaining 60%-70% balances to be paid on these lines by year end. This is why we still expect to close the year close to EGP 4 billion. Additionally, what we did so far, as we reported the EGP 700 million out of the EGP 4 billion in our CapEx. However, as well, we have on our advances to our fixed asset suppliers another EGP 700 million. This will bring the total for the first half around EGP 1.4 billion. This is why we believe that we are still on track. Almost 40%-50% of the spending is already done in H1 2026. Thank you, Salma Abdelhay. Okay, thank you. Some questions from Natalia Zabrodina. The first question you mostly addressed it, but I will read it out. Could you provide more color on operational updates and the general outlook for the Iraqi business operation? Do you expect any headwinds or tailwinds in the near to midterm? The second question is, could you elaborate on the reasons behind the volume drop in rusks, wafer, and biscuits? It looks like the price increases in those segments outpaced inflation year-on-year. Was price the only driver, or were there other factors behind the volume decline? Thank you, Natalia. I think we have covered the first part of the question on Iraq, whether we will face headwind or tailwind. I mean, this is unpredictable. We hope nothing will alter our plan because, as we mentioned, we have a very aggressive plan for Iraq, and we are very ambitious about the potential of the market. So hopefully, nothing will disturb that. For the second part of the question, I will leave Ahmed Samy to report on the rusks. But mainly rusks, if I may answer, rusks, we are running at full capacity of the two lines. The volume have dropped probably because of moving toward higher price point SKUs rather than selling smaller pouch. But Ahmed, I think you can elaborate further on this question. Please, تفضل. Thank you, Hany. You are absolutely right. Definitely, specifically on salty snacks, we have encountered a drop actually of around 20% in volume, and this reflects the upsizing and uppricing that we conducted on this category. However, we are fully utilized in terms of capacity, and we are planning to do more of asset sweating in order to be able to even produce more volume going forward. That is why we see that we were able to capture the value still with this kind of drop in volume. Same goes for wafers, where we have had an increase in this quarter by 15% versus same period last year. However, we had a drop in volume by almost 8%, which was a result from the fact that we exited completely from the price points of EGP 2 and EGP 3, and our starting price point is currently at EGP 5. The main driver for the value growth was the recent introductions on the EGP 10, EGP 15, and EGP 20, which are much higher in the propositions and offerings than the average price point for this category. Hence, we started seeing some sort of recovery when it comes to the gross margins of wafers versus the previous quarter, and we are expecting this improvement to remain the same going forward till end of year. Last but not least, if we look into biscuits, we have had a growth in value of around 32% versus same period last year, again accompanied by 9% drop, which is mainly due to the fact that we moved almost completely from the EGP 5 price point, and we have now most of our portfolios placed at the EGP 10 price point. If we are doubling the average price point or we are doubling the price point from EGP 5 to EGP 10, and we are only getting a volume drop of 10%, that definitely reflects positively on the brand. We have seen that this was the main reason behind our gross margins surging from almost 6% or 7% in the same period last year to almost 30% or about 30% in this quarter. I think that now we have a more sustainable range across all three categories. Our portfolio is much stronger. We are sustaining our profitability, and the next step is to continue on growing these offerings and range organically at these price points, which will definitely help us sustain our profitability at a very decent level. Thank you. Thank you, Samy. Thank you. Again, as a reminder, to ask a question, you can type it in the chat or click on the raise hand button. Last call for questions. There appears to be no further questions at this point. Thank you to Edita's management for your time today. Actually, sorry, there is a question that just came through. Follow-up from Natalia Zabrodina as well. Would you provide an update on the guidance for 2026? Sameh Naguib, you want to give an update on guidance for 2026? I think we are on track for our budget and the previously announced direction. Maybe a slight improvement on the top line, and the bottom line still on the same percentages. I think, no real change versus the previous numbers. Still see the same direction, and we are on track to achieve it. Thank you. There is another question, sorry, that came through, one second, from Varuna Kumaraj. What is the reason for the increase, I think, in overdrafts in second quarter of 2026? Okay, I know the answer, but I will leave that to Sameh Naguib. Thank you, Hani Berzi. I think we have two reasons for the change in our overdraft in the past period. I think one part is related first to the increase in inventory, moving from EGP 2.3 billion to EGP 2.8 billion, while on the other side, the payables did not increase with the same amount, we had slightly to finance it with the overdraft. However, the most important reason is that we invest most of our cash on treasury bills, yielding better than our overdraft rate. We tend and we have the preference to use the overdraft to finance the operation while still investing our own cash on T-bills. You will see both increase in overdraft and in cash position as well. Nevertheless, additionally as well, during Q2 of 2026, we had advances to our fixed assets suppliers, and we have as well distribution of EGP 1.1 billion of dividend to our shareholders. Thank you. Thank you. There are no further questions at this point. I think we can conclude. Thank you so much, Edita management, for your time today. Thank you, Hatem, and thank you everyone for joining today call. Of course, we are all very pleased as Edita management with the performance for the first half of the year. We are also very confident that we are moving into our two best quarter, Q3 and Q4, even stronger. As we mentioned across the call and in our conversation today, that we have taken into consideration capacity utilization in order to sustain the growth for 2027. We have already building additional capacity in order to be able to deliver our 2027 budget, which is already in progress at the moment. And we are not looking only at top line, but we are also looking at our bottom line, making sure that our gross margins are maintained, making sure that we are on top of it because of the fluctuation that we have seen all the time, and we have been very well trained, I mean, to manipulate such, I would say myself and the team, such incident, whether when it come to devaluation or whether to come to regional geopolitical instability. So we are there always on tiptoes, making sure that we are adjusting our pricing, adjusting our portfolio to maintain the same gross margin. So eventually, we are very confident. As I mentioned in my previous call, we have a very, very ambitious plan for 2030. We want to reach the $1 billion by 2030 as sales, and we are very confident that we can achieve that figure. We are also very pleased, I'm personally very pleased with the performance of our stock over the past couple of days, and eventually things will continue on the same momentum, delivering more profit to our shareholder. Thank you very much. Once again, thank you for joining the call, and I wish you, for those who are still in summer holiday and vacation, a good end of summer holidays. Thank you very much, and thank you, Hatem, for hosting today call once more. Thank you so much, Hany and team, for your time today, and thank you everyone for participating, and this concludes today's call. Have a good rest of the day, everyone. Thank you. Thank you. Thank you, everyone. Thank you.