Earnings Call: Q1 2026

May 17, 2026

Summary

Q1 revenue grew 34.7% and net profit rose 108%, with volume growth and margin expansion. FY2026 revenue guidance is EGP 26bn–EGP 27bn, while capacity investment and cost pressures shape the outlook.

Hello everyone, and welcome to Edita Food Industries Company's first quarter 2026 results call. My name is Nada Amin, and it's my pleasure to be hosting this call on behalf of EFG Hermes. From Edita's management team, we welcome Mr. Hani Berzi, the company's Group Chairman and CEO, Mr. Sameh Naguib, the company's Deputy Group CEO, Mr. Ahmed Samy, CEO Egypt, Mr. Kareem Elsharkawy, Group CFO, and Mr. Omar El-Abhar, IR and investment analysis senior manager. Gentlemen, please go ahead. Thank you, Nada. Before I begin, this time around, I would like to congratulate the team for the exceptional results that was published today. Congratulations. I'm very pleased that you have also delivered exceptional results in a quarter like this. Alhamdulillah. Good afternoon, ladies and gentlemen. As I said, I'm Hani Berzi speaking. Thank you for joining our first quarter 2026 results call. Most of the speakers who are with me today, Nada, Ahmed Samy, and Sameh, I would like to welcome Kareem Elsharkawy, our Group CFO, who have joined the company recently taking the helm of the finance in the company, and Omar El-Abhar, our senior investor relations and investment analyst manager. I'm very pleased to report a strong start of 2026 for Edita, building on the momentum with which we closed last year. In the first quarter, we delivered revenues of EGP 5.8 billion, up 34.7% year-on-year, while the net profit more than doubled to EGP 793 million, up 108.1%. This performance reflects not only strong top-line growth, but also a meaningful improvement in profitability and continued strength in execution. What is particularly encouraging is that the quarter saw another healthy combination of volume growth, continued migration to higher price points, and stronger operating leverage. Total packs sold rose 18.3% year-on-year to 1 billion packs, while tons sold increased 36.7% to 42,000 tons. This was supported by strong demand across key categories and rich product mix. Our core cakes and croissants segments once again best performed, with revenue growing 35.9% and 67.1% respectively, while our more nascent segments continued to support diversification, led by rusks and candy. This balanced performance reinforces the strength of our portfolio and our ability to capture growth across multiple segments and consumer occasions. Beyond the quarter's strong financial and operational results, we also continued to make tangible progress on our strategic priorities. On the portfolio side, we advanced innovation across several categories with new formats, pack sizes, and flavor variants tailored to evolving consumer preferences and price points. On the capacity side, we continued to invest behind future demand. During the quarter, we commenced operations at one of the cake lines acquired in October 2025, which was fully ramped up by February and reached full utilization by the end of the quarter. The second bakery line that we acquired in October was fully ramped up by April, reached full utilization during May, adding further capacity across our core cake and bakery segments to support future growth. We also signed our second toll manufacturing agreement in Egypt, this time in the wafer segment, which will support the Freska+ growth and broaden our ability to address new subcategories. We just launched, through this agreement, our new Freska Square that was launched a few weeks ago in March. Regionally, we took an important strategic step in January with the acquisition of the HoHos, Twinkies, and Tiger Tail brand rights across the remaining African markets. This expands our long-term regional optionality and reinforces our ability to build scalable pan-African brands. We also continued to scale exports, which rose more than 33% year-on-year in the quarter, while the Morocco scale continued to deliver good operational progress. Meanwhile, in Iraq, the startup of the cake production line was delayed by the governmental approval and regulatory procedures, which have now been finalized, with the line becoming operational in March 2026. The bakery line was also delayed due to the geopolitical situation in the region, which created travel restrictions and affected the mobilization of key technical personnel. While this delay pushed back the broader operational pickup, demand in the market remains strong, and we continue to address it through exports. Supported by the cancellation of import restrictions out of Egypt, our exports to Iraq increased by 134% in the first quarter, reinforcing our confidence in the long-term opportunity there. We also continued to advance our sustainability agenda. During the quarter, Edita Group signed a partnership with Shift EV to electrify its nationwide distribution fleet. By May, we commissioned the installation of a rooftop photovoltaic solar energy system at our Sheikh Zayed headquarters, including our administrative building, the central supply chain warehouse, and the central research and innovation building. This initiative reflects our commitment to fostering greener operating environments and reducing the carbon footprint of our operations over time. Overall, the first quarter reinforces our confidence in the outlook for the business. We continue to see healthy demand, a stronger operating base, and attractive opportunities to grow through innovation, capacity expansion, regional development, and further portfolio diversification. As we move through 2026, our priorities remain clear: maximize returns in our home market, continue scaling our regional platform, and support the growth of our emerging segment in a disciplined and profitable manner. With that, I would like to hand over to Sameh to walk you through the financial highlights before we open the floor for questions. Sameh. Thank you, Neil. Good afternoon, everyone. Let me take you through the key financial highlights for the first quarter of 2026. Revenue reached EGP 5.8 billion in the first quarter, up 35% year-on-year, supported by robust volume growth, continued price-point migration, and strong demand momentum across key categories. Operationally, total tons sold increased 37% year-on-year to 42,000 tons, while total packs sold rose 18% to 1 billion packs. This was accompanied by a 14% increase in average price per pack, which reached EGP 5.76 in Q1 2026 compared to EGP 5.26 in the prior year quarter. At the segment level, performance was led by our core categories. Cake revenues increased 36% year-on-year to EGP 3.1 billion, while croissant delivered even stronger growth, rising 68% to EGP 1.6 billion. Among the nascent segments, rusks and candy also recorded strong revenue growth of 57% and 19% respectively. Gross profit recorded a 49% year-on-year increase to EGP 2 billion, with gross margin expanding to 35% from 31.6% in Q1 2025. This was supported by slower cost growth relative to revenue, as well as improved cost efficiencies across key components. More specifically, cost of materials declined to 53.7% of revenue from 56.2% at the prior year quarter, while manufacturing overhead improved to 10% of revenue from 10.3%. SG&A remains well-managed despite continued commercial investment. Total SG&A, including selling and distribution, advertising and marketing, and general administrative expenses, increased 45% year on year to EGP 1.05 billion, representing 18.2% of sales compared to 16.1% in Q1 2025. The increase was mainly driven by higher selling and distribution expenses, as well as greater advertising and marketing support behind demand generation and product launches. Despite the higher SG&A spend, EBITDA continued to expand strongly. EBITDA rose 52% year on year to EGP 1.1 billion, with margin improving to 18.3% from 16.2% in the prior year quarter, reflecting stronger gross margin dynamics and the company's ability to convert top-line growth into higher operating leverage. Net profit also accelerated sharply, increasing 108% year on year to EGP 793 million, with net margin reaching 13.7% compared to 8.9% in Q1 2025. This strong bottom-line performance was supported by revenue growth, margin expansion, and significantly higher interest income. On the regional front, net export sales reached EGP 550 million in Q1 2026, up 73% year on year and representing 9.5% of total revenues. Edita also delivered revenues of EGP 155 million, up 21% year on year, reflecting continued operational progress and strengthened distribution capabilities. From a balance sheet perspective, as of 31st of March 2026, Edita recorded a net cash position of EGP 853 million compared to a net cash position of EGP 266 million at year-end 2025. Cash and bank balances stood at EGP 5.3 billion at the end of March. Inventories stood at EGP 2.55 billion end of March 2026 compared to EGP 2.3 billion at year-end 2025, with trade and note receivables reaching EGP 328 million, up from EGP 243 million at the end of December. Total CapEx for the period ended 31st of March 2026 amounted to EGP 290 million, primarily allocated to expansion-related investments alongside maintenance and distribution vehicles. Overall, the first quarter of 2026 demonstrated our ability to sustain the strong momentum established in the later part of last year, translating healthy demand and volume growth into meaningful margin expansion and bottom-line performance. With that, we open the floor for further discussion. Thank you. Nada, you open the floor? Yes. Thank you so much for your presentation. As a reminder, you can use the raise hand function or drop a question in the chat box. We'll just wait a minute for some questions to begin to come in. There's a question from Habiba Ahmed in the chat box asking, "Can you please provide some guidance for 2026 earnings and sales? Guidance for 20 Sorry, can you repeat the question again? Guidance for? 2026 earnings and sales. Thanks for this question. We're expecting our revenues in this year will end up in a whole lot of being between EGP 26 billion and EGP 27 billion in total. Okay. I see Harry has his hand raised. Harry, go ahead. There is another question just asking to repeat the guidance figure for revenue that was just mentioned, between EGP 26 billion and EGP 27 billion. Correct. Harry, your line is now open. Please go ahead. Just unmute from your side, please. Will you be providing a net income guidance figure? The net income guidance? The net income, we still maintain our revenues on the margin in the range of 10%-11%. Does this answer your question? Yes, that is clear. Thank you. Maybe until we wait for some more questions to come in, if I may ask a quick question. If you could give some context on the improvement in net 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. For the income interest expense part, we have different factors. Starting with the interest income part, for sure, we have been accumulating some cash over the last period, building a larger base for the calculation of the interest. We have been focused on investing this cash on treasury bills with different maturities to enjoy the current high level of interest rates and the key bank deposit. We still keep a portion of the cash in dollar terms to mitigate any balance sheet exposure on FX fluctuations. In terms of interest expense, and I think the effective interest rate for our investments is around 18%-19% in Q1 2026. For the interest expense, we managed as well to maintain 60% of our total debt in foreign currency at probably an average of 6%-7% for the resonance in dirhams and slightly in Iraqi dinar, and the remaining 40% in Egyptian pound, and that probably an average of 19%, 20%. This would yield an effective interest expense of 15%. Based on changing in our mix of debt and cash between foreign currency and local currency, we managed to improve the interest income expense ratios. Talking about our net debt position throughout the year, we end Q1 with an EGP 850 million of cash position. We expect for first, we have in April the payment of our dividend of EGP 1.2 billion. Payment is announced. We have a plan on investments around EGP 4 billion, and this would drive on top of the operational performance during 2026, and we expect to have a net debt somewhere between EGP 1.5 billion-EGP 2 billion by year end. This, I think, would be around 0.4, 0.5 net debt to equity ratio. Thank you. That is very clear. Thank you so much, Harry. I believe you should be able to go ahead now. Okay. Can you hear me okay? Yes, please go ahead. Thank you. Yeah, sorry, I couldn't unmute from my side. Yeah, thanks for the call. Just to get a bit more color on the growth aspirations. I think you said 26 billion to 27 billion, which implies quite 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 price, and whether there's any categories that you're expecting to underperform or outperform? Okay. Actually, thank you for this question. If you look into our performance throughout the past year, we see that we have been witnessing a very significant volume recovery across all categories. Our total volume on group level has been growing by almost 7% quarter-on-quarter, starting in 2025, and in Q4, it was almost 9%. Definitely in Q1, we had a bit of slowdown due to the seasonality and the month of Ramadan. However, this, as we speak, we see that this has been rectified after this kind of seasonality. We expect this trend of growth in demand in terms of volume, it will continue until the rest of the year to end up with a volume growth over the past year of around 15% in total, which is quite significant and much faster than the rest of the market or the total snacking business in Egypt. If we look in terms of tonnage, I think in this quarter compared to last quarter, or the same period last year, we see a growth of around 36%. I have been talking, the 15% I referred to is mainly in terms of number of units or number of cartons. Yeah. However, if we look in tonnage format, it is 36% versus the same period last year, which is quite significant. Again, it is way ahead of the rest of the market. The good thing that it is reflected, as I mentioned, among all of our core categories, and this is why we have a very aggressive CapEx plan this year in order to accommodate this kind of growth and this kind of demand that we are witnessing in the market. Definitely, these projections are given that we do not have any major disturbance on geopolitical level within the region. Thank you. Hopefully. Hopefully, yeah. Just to add a follow-on question to that. So you grew 35% revenue with 18% pack growth, and you are expecting the pack growth probably to slow down a bit to 15% for the full year. It still seems like if we continue at current rates, you would way overachieve that 26 to 27. Is that right, or have I misunderstood? Okay, so let me clarify one thing. The 15% is in volume in terms of not tonnage. Yeah, in packs. Sorry, in volume. Sorry, I confused you. The 15% is in volume in terms of number of units. However- Yeah when I said 36%, 36% is- Tonnage growth in tonnage in Q1 2026 versus the same period last year, versus Q1 2025. Yeah. Packs this quarter grew 18%. This quarter was 18%. However, it varies in terms of mix, so we expect that the full year will normalize around 15%. Okay. I think you remember the base was quite impact in the first quarter of 2025. 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, again, we are currently fully utilized, and that is why we are adding capacity. In some cases, again, we had to prioritize, and we have the demand, even demand for more cakes. However, we have to prioritize between our exports and our local demand. Now that we are adding capacity, and this capacity is mainly, again, across our core categories, and in croissants and in cakes, we expect that we will be also able to further grow the volume and value in the coming quarters as well. We see a lot of demand, and actually, this, again, adding to this, we are also improving our mix. Again, we are expecting, as I mentioned, around a good increase in volume by 15%. However, there is an improvement in terms of pricing and in terms of mix that will be reflected as well in order to reach the revenue of EGP 10.7 billion. Okay, thanks. My second question is related to costs and profitability. I think you mentioned in the last call that you are seeing kind of 10%-15% increase in costs. Just wondering how that is evolved now, and whether you will be taking any price increases, because this will likely have some impact to margins. Okay. To answer you on this one, definitely, we have seen that the raw and pack materials have increased in cost, reflecting the geopolitical situation in general, and the certain scarcity, the increase in freight costs, oil prices. It was all reflected, definitely started to get reflected in our raw and pack material cost. We anticipate a full impact from here, 3%-4%. However, we are implementing, as we do, we are implementing a mix of indirect price increases, very, very minor price increases in very specific categories and not in major SKUs in terms of contribution. Definitely, we might also include certain improvements in retail margins that we offer. This, in order to combine all these tactics, will help us in reducing the impact and actually mitigating the impact that we are getting from increasing these costs. Okay. And just- Yes, Arthur, you go. Sorry. I was just going to say, given the margin that you did last year, what should we think about as a baseline for 2026? Maybe on EBITDA or EBITDA level? Can you comment on that? Can you repeat that level of margins? Okay. We still definitely versus we still think that we will be able to maintain our margins on EBITDA level. And as I mentioned, we will be able to mitigate and we're trying to mitigate when it comes to the increasing costs coming from the raw and pack, we will be able to mitigate most of these increases throughout the few initiatives that we've been implementing on our pricing structure. Okay, so similar margins, you're saying? Yeah, more or less, yes. Okay, thank you. Thank you. Thank you. We have a couple of questions in the chat box that relates around what we were just discussing. I will read them out, and if there is any additional comments, please feel free to pepper those in. It is from Sindisio. He is asking, "How have costs for key commodity prices evolved since the close of the quarter, such as wheat? What proportion of costs are USD denominated? If you are currently hedged and how we should think of the evolution of gross profit in the particular environment, keeping in mind higher costs in general? For the cost, the price evolution, talking specifically around wheat for the question, I think so far prices on wheat specifically were quite stable. I think the stocks in Egypt did not allow any movement in the sourcing prices. We do not have long-term contracts for our flour consumption. So, I think still despite this, the prices are stable. On other materials, prices are increasing somewhere between 10%-15% on average. With some exceptional materials, specifically the oil and related materials such as for the packaging, I think the increases reach close to 100% increase in prices. That is impacted by oil prices going up, impacted by the Egyptian pound devaluated by around 15%, and impacted as well by sourcing of the raw materials from the GCC because of the geopolitical situation. 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%. In total, 40% of our materials are correlated 100% in terms of the dollar. Is there any other questions? He had also asked if the company is deploying strategies to mitigate the impact on margins, maybe other than price migrations that you had mentioned. I think Ahmed covered this point for you. Great. Sarah Gabriel was asking specifically about your view on cocoa price trends going forward and how these affect your business operations and margins, please. Cocoa prices, I think they reached $11,000 and we've seen them declining to seven, to five, and I think now they went down to around $4,000 a ton. I think this offset part of the price increases that we've seen in the last year. I think the high of cocoa powder is behind us, right? Yeah. I think the trend now is on the downside. We have to worry about other things than cocoa powder. Yeah. That's clear. Thank you. Bilal Sabah asks if you can please provide more clarity on the guidance, as the low end of the guidance of EGP 26 billion in revenues and 10% net margin imply lower figures than the trailing 12 months. Can you start with the analysis of the top line, then we go to the right part of the question? The question was the build-up of the 26, the EGP 27 billion. Can you please clarify the question? Can you 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 we spoke about the bottom line of 10%-11%. So out of the 2026, 2027, we will be talking about roughly EGP 2.8 billion-EGP 2.9 billion. I mean, that's around 15% higher than the current year. This includes and reflects the impact of the prices that we've seen currently. Yes, we have mitigation plans to offset the price increases on materials, but again, we will not fully shift this to the consumer. Thank you. There's a question from Youssef Sayed who asks, "Do you think Q2 will be like Q1? Yeah, I think, inshallah, it should be better figures because we are recovering from the seasonality of Ramadan. So in the second, inshallah, it should be a higher contribution in terms of revenue. That is correct. From what we see, especially during the months of April, that we had a good month of April, that the month of May is moving in the right direction. Ramadan is behind our back, and despite Ramadan, the first of the month, we delivered good numbers. So we are expecting if it will normalize the geopolitical situation, that we will deliver a strong fourth of June, especially that we move very fast to mitigate the risk of the cost increase, whether of the EGP or the price of commodities that have hiked, especially the packaging materials because of the price of the petrol. If everything will be stable, then we will deliver good fourth, God willing. You can imagine, we want some sort of confidence regarding the way forward. The good thing that we have been mentioning, it is not only about volume recovery versus past years, and probably this year will be a record-breaking in terms of total number of countries that we will be able to close the year with. But also, aside from this, we have a great improvement in terms of mix. Consumers are more and more migrating to higher price points, which will reflect even better on our profitability and margin. This will help us. It is another further thing that will help us to mitigate any kind of turbulence that we see in terms of increasing costs of raw and pack. Thank you. Thank you. Cindy CEO is asking if any of your capacity or production facilities have been subject to restrictions in operating hours? Actually, most of our lines now, we work on Fridays, so we almost work 24/7 for most of the line category, especially of the core, the cakes, and the croissants, and the rusks. Unfortunately, now we do not have any more space available to accommodate further lines. That is why in our 2026 CapEx of EGP 4 billion, we have included the construction of the new extension, the extension of the E08 factory. The E08 factory is a 50,000 sq m plot of land that we built half of it in 2018, 2019. Then we decided to halt the remaining of the building because of the devaluation of the Egyptian pound, you know, the COVID, and whatever happened then. Nowadays, we have no more capacity, so no more space to add additional lines. That is why we already contracted for the construction of the expansion that will accommodate additional, if I am not mistaken, six to eight production lines there. We have one cake line that is already on ground that we will install there. We have one croissant line that we will also install there. This will give us more flexibility to add additional production lines, increase our capacity, and consequently increase our revenue. It is a good problem to have. The challenge now is to build capacity to fulfill the demand, which is great. Yes, I am adding to what Hany said, because I think the question is referring to the fact that due to the restrictions that were imposed recently from the government regarding the energy consumption, everything. That was the main thing behind the question. Actually, we did not have any restriction to stop any of our facilities or production. We did not have any kind of restriction in terms of energy consumption or any direction to stop operation in any of our facilities. This was not problematic at all. And we have, as Hany mentioned, we have all our facilities operating almost 24/7. Oh, I did not get the question right. I am sorry. Thank you. I think that is clearer now. If you do not mind, I will move over to a couple of questions on Iraq. Maybe it will be easier if I ask them one by one. The first one is if you could please provide your current and planned capacity in tons in Iraq, and how that translates to 2026 and 2027 sales in USD terms, please. Our current production, our current utilization is. Our current capacity is around 11,000 tons for both production lines. We are adding a new line to be operating as of next year, with an additional capacity of 4,000 to 5,000 tons. This capacity should be at a utilization rate next year of close to 80%. If you could please provide some color on expected EBITDA margin for Iraq. So in the current year, EBITDA margin will be very lower than our group average because of the startup delay, the additional costs during the startup. We understand that this should normalize with the additional line that we will add this year, operating next year, to come close to the normal group EBITDA margin. Thank you. Also on Iraq, how has the operating environment evolved during the first quarter of 2026 versus the second quarter or current days? What is the expected contribution of Iraq to total revenue in percentage terms? I think in Q1, we faced some delays on running our production line, and I think we had further delays on the bakery establishment there because of the geopolitical situation. We had to evacuate our local team during March back to Egypt, and they had to stay in Egypt. We were unable to send our teams for the commissioning of the production line, the trainings for the employees there. We were able to send them back once the airport was open mid-April. I think now, I think the line is already in production. We will be in full operation, let's say, by 1st of June, the lines will be fully operating there. What was the other part of the question? Yes, thank you. The last two 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 EGP 4 billion of CapEx for 2026. Out of this amount, 70% are expansion-related, 15% are working environment-related, and the rest are sustainability and replacement of CapEx. We had in Q1 around EGP 300 million of CapEx, but as well, we had EGP 630 million of advances made for the CapEx to come during the year. So in Q1, we paid around EGP 1 billion out of the EGP 2.4 billion planned for 2026. Thank you. That's absolutely clear. At the moment, I see no additional questions in the queue. Sorry, one just came in from Cedric, who asks, "What is the normalized level of SG&A as a percentage of revenue? I think we had Q1 at 18%, last year at 16%. Q1 had some extra marketing spending. That will normalize throughout the year, so we go down to our 16%-17% SG&A average. Thank you. There's a question from Anoop on your debt, if the company plans to change the composition of debt in terms of FX versus local. To change the 60/40? Yes. I think for the time being, we are fine with the 60/40. We believe the balance sheet is protected in terms of currency exposure between foreign debt and local debt, given that most of our foreign debt is used to support our international operation. Thus, the USD debt is linked to a USD asset, so we are fine with the exposure. The parts that are not covered through foreign assets are covered through foreign currencies in USD denominated. I think we will maintain this structure until we see the Egyptian pound interest rates go down. Then we can consider shifting and getting more reliance on the Egyptian pound debt. Thank you very much. We have a follow-up question from Habiba Ahmed, who asks if you could provide CapEx guidance for next year, 2027. I think that would be too early. Understood. To ask any questions, you can drop a question in the chat box, or you can use the raise hand function. I will just pause minutes in case there are any unanswered questions. It appears we have no additional questions. I will hand it back to you gentlemen for any concluding remarks, please. Thank you. Thank you, Nada Amin. Well, personally and my team are very pleased with the results of Q1 2026. Obviously, as we mentioned in our conversation today and answering the questions, the demand is there. We are running very fast, actually, to fulfill demand. We have restructured our portfolio of pricing. We are very happy also to see our core segment continue to deliver growth, and our nascent category also to mature slowly. We are expecting things normalize without any further turbulences in the region. That situation will continue to improve. As you see, the weakening of the Egyptian pound and some of the commodity that have been hit due to the price of petrol, we hope that the situation will ease back, and that we will continue monitoring. But anyway, we have all the resources, we have all the tools. We have been through that before so many times, and so many over the past decade, we have faced even more aggressive situation. So we know how to handle that. That is what I am trying to say, that even with the pressure that we feel on commodity, we have immediately, as I say, reacted to that in order to mitigate the risk of the cost increase to maintain our bottom line. So fingers crossed, things continue. We hope to talk to you again in Q2 with a solid result also that will drive us till the end of the year with a remarkable year, inshallah. Thank you very much for joining the call, and I would like to wish everyone who is celebrating Eid, a very happy Eid, and a very nice break. The government is very generous with six days holidays, and that is put another challenge on us because we need to work our factories during the Eid in order to deliver a good month. So happy Eid to everyone, and thank you for joining today's call. Thank you. Thank you. Thank you, management, and thank you to the participants for taking the time today. This concludes today's call. You can now disconnect.