Good afternoon, everyone. I am Ahmed Talaat from Beltone Holding, and I would like to welcome you all to Juhayna's third quarter earnings conference call. I would like you all to please note that all participants in the call will be in a listen-only mode, and that after today's presentation, there will be an opportunity to ask questions. Should you wish to have access to the recording of this event, please do not hesitate to reach out to myself or Mr. Karim Ibrahim, Juhayna's Head of Investor Relations. With that said, I would like to hand the conference over to Mr. Tarek Elwan, the Chief Financial Officer for Juhayna, and Mr. Karim Ibrahim, the Head of Investor Relations, for their opening remarks. Please go ahead when you are ready.
Thank you, Talaat. Good afternoon, everyone, and thank you for joining us today. We are pleased to be with you today to discuss Juhayna's third quarter and the first nine months of 2026 results. Let me start with the headline numbers. Third quarter revenue grew 25% year-on-year to a record of EGP 10 billion, taking nine-month revenue to EGP 27.7 billion, also up 25%. Net profit grew 33% in the quarter to EGP 654 million, and 26% for the nine month to EGP 2 billion. EBITDA grew 28% in the quarter, with the margin expanding by 0.4 percentage points to 14.7%. The third quarter extended the momentum we built in the first half, with the record revenues, double-digit growth in every one of our segments, and strong summer and back-to-school demand for our chilled, dairy, and juice products.
We delivered this against a challenging backdrop of disruption to key shipping routes, ongoing geopolitical tensions, and a weaker Egyptian pound at quarter end. I want to be transparent about how each of these shows in our numbers, in gross margin, and in foreign exchange, as we walk through the results. There are four things we want you to take away from today's call: continued volume-led growth across all of our segments, EBITDA margin expansion, and net profit growth despite a justifiable gross margin moderation, a business whose quality continues to improve, and a balance sheet that is starting to ease. Let me start with our financial performance for the quarter and the nine month. In the third quarter of 2026, Juhayna delivered record-high net revenues of EGP 10 billion, a 25% year-on-year increase from EGP 8 billion in the third quarter of last year.
For the nine month, net revenues reached EGP 27.7 billion, up 25% from EGP 22.1 billion. Growth was broad-based. In the quarter, dairy grew 12%, fermented 33%, juice 32%, and Concentrates & Agri 39%. This performance was driven by volume growth, supported by single-digit price adjustments and the continued expansion of our finished product exports. Gross profit for the quarter reached EGP 2.3 billion, up 23% year-on-year, at a margin of 23.2%, which is 0.3 percentage points below the same quarter last year. For the nine month, gross profit was EGP 6.6 billion, up 21% at a margin of 24%. The moderation in the quarterly margin comes down to a small number of identifiable factors. First, concentrates were selling price remained low and continued to weigh on the segment's profitability, even as its revenue grew 39% in the quarter. Second, currency.
Raw materials purchased at a higher exchange rate began to flow through our cost of goods sold, whereas the first half reflected purchases made at lower rates. It is important to note that gross profit margins improved across all of our other business segments, so the pressure is concentrated in specific areas rather than broad-based and should be manageable on the long run. For the nine month, the year-on-year comparison also still carries the high base created by the exceptionally strong concentrate pricing of the first quarter of last year. EBITDA for the quarter reached EGP 1.5 billion, up 28% year-on-year, at a margin of 14.7%, compared with 14.3% in the third quarter of last year. I would like to draw your attention to this.
EBITDA margin expanded even though gross profit margin moderated, because SG&A fell to 10.5% of sales, a 0.6 percentage point improvement, which more than offset the gross margin impact. For the nine month, EBITDA reached EGP 4.1 billion, up 19% at a margin of 15%. At the bottom line, net profit for the quarter reached 654 million, up 33% year-on-year. Representing a net profit margin of 6.6%, which is 0.4 percentage points higher than a year ago. For the nine-month, net profit reached EGP 2.0 billion, up 26% at a margin of 7.4. This was supported by volume growth in our core segments, strong summer and back-to-school demand for chilled and juice products, and continued growth in 3rd Party Distribution.
On foreign exchange, the Egyptian pound closed the quarter weaker than it did at the end of the second quarter, which resulted in a pre-tax FX loss of EGP 107 million in the third quarter, in contrast to the positive FX movement we benefited from in the second quarter. Excluding this non-operational item, third-quarter net profit would have been approximately EGP 761 million, a margin of 7.6%, which we believe is a better reflection of the underlying earnings power of the business. Turning to the operating environment. The third quarter benefited from the summer season and the back-to-school season, both of which drove a significant increase in demand for our chilled, dairy, and juice products. Demand across our core categories remained resilient. On market share, our nine-month position shows both where our commercial focus is working and where we have more to do.
Flavored milk led the way, with our share increasing 4 percentage points to 60%, and spoonable yogurt gained one point to reach 32%. In plain milk, our share was 60%, down ywo points, and in drinkable yogurt, it was 41%, down four points. In juice, our share eased one point to 31, although it is worth noting that our juice revenue still grew 32% in the quarter. We continue to refine our commercial approach in these categories. I would also highlight 3rd Party Distribution, which reached 210 million in the quarter, compared with just 9 million in the third quarter of last year, and EGP 428 million for the nine month, against EGP 80 million. This reflects an important structural shift in our business.
Juhayna is increasingly becoming a distribution platform for the region, not solely a manufacturer of our own branded products, and we see this as a meaningful growth driver going forward. Moving to exports, and again, I want to lead with the quality of the export mix rather than the headline number. Export sales reached EGP 499 million in the quarter, down 11% year-on-year, and EGP 1.7 billion for the nine month, down 8%. In USD terms, exports were $9.6 million in the quarter, down 27%, and $32.8 million for the nine month, down 14%. We are restructuring our export revenue mix in much the same way that we restructured our P&L in the second and third quarters of 2025, a restructuring that enhanced the profitability of our core segments. The decline in total exports is largely attributable to lower concentrate volumes and pricing.
But finished product exports, the higher value and more strategically important part of the business, continued to grow, with nine-month revenues in USD terms up 33% year-on-year. This shift in our export mix is helping to cushion the impact of lower concentrate revenues and reinforces our commitment to building a more diversified and resilient export base. Looking ahead, we expect growing finished product volumes to further mitigate short-term volatility, and we continue to pursue additional foreign markets to expand Juhayna's international footprint. Turning to costs. Our SG&A ratio improved to 10.5% of sales in the quarter, down 0.6 percentage points year-on-year, with SG&A growing 19% against revenue growth of 25%. For the nine month, the ratio was 11.1%, flat year-on-year. This reflects our continued focus on operational efficiency and disciplined expense management alongside a more effective allocation of marketing expenditure.
At the same time, we maintain strong commercial activity with targeted campaigns supporting summer consumption and the back-to-school season, which contributed to higher volumes. We remain committed to balancing investment in brand building and market share with disciplined cost management in order to support sustainable profitability. On the investment side, we continued to execute our expansion strategy. During the first nine months, we invested EGP 1.7 billion in CapEx, directed towards strengthening our capabilities across manufacturing and distribution. Net debt stood at EGP 7.1 billion at the end of September, up 18% from EGP 6 billion at year-end, primarily reflecting higher working capital requirements and the continued execution of our CapEx program. Importantly, net debt declined slightly compared with the end of the first half, even as we continue to invest.
On inventory, which we flagged last quarter as a deliberate working capital decision in response to geopolitical tensions and supply chain disruption, inventory stood at EGP 8 billion at the end of September, 38% above year-end, but slightly below the level at the end of the first half. In other words, the build has leveled off and has begun to ease. Net cash generated from operating activities reached EGP 1.9 billion during the first nine months of 2026, reflecting improved cash generation despite the higher working capital requirements associated with our inventory buildup. One further update on our funding and our upstream investment. We have announced that Enmaa Livestock, one of our group subsidiaries, signed a EGP 1.7 billion medium-term financing agreement with CIB.
The facility has a tenor of around eight years and will finance CapEx at the Enmaa farm, including barns for the cattle herd, an additional parlor, supporting infrastructure, and an increase in herd size, all in order to expand our dairy production capacity. This investment strengthens our integrated local supply chain, supports the local milk production industry, and matches long-term funding to long-term assets. Looking ahead to the final quarter of 2026, I want to share what nine months of execution have shown us and why we remain confident. Volume momentum remains strong across our core categories, and every one of our segments grew double digits in the third quarter. Our commercial focus is delivering in the categories we prioritized, with flavored milk and spoonable yogurt gaining share, while 3rd Party Distribution and finished product exports continue to scale.
The price adjustments we implemented earlier in the year continue to support revenue growth. On margins, I want to be clear-eyed. The factors behind the third-quarter gross margin, namely concentrate pricing, the exchange rate at which raw materials were purchased, and freight costs, are specific and identifiable, and we are managing each one of them. Our EBITDA margin expanded in the quarter, which shows that our operating model can absorb these pressures. Gross margin will continue to reflect the exchange rate at which our inventory was purchased and the freight environment, and we will actively manage pricing, procurement, and cost discipline to protect profitability. Regional geopolitical developments continue to create volatility in input cost, logistics, and foreign exchange markets. However, we remain confident in our positioning.
Juhayna benefits from a highly integrated local supply chain, strong sourcing capabilities, leading brands, and one of the largest distribution networks in Egypt, advantages that provide resilience during periods of uncertainty. To summarize, four messages should stand out from today's call. First, strong volume-led growth continues, 25% revenue growth in the quarter and for the nine months, with every segment growing double digits in the quarter. Second, profitability is resilient. EBITDA grew 28% in the quarter, with the margin expanding to 14.7%, and net profit grew 33% in the quarter and 26% for the nine months, with the gross margin moderation tied to identifiable factors in Concentrates & Agri, currency, and freight. Third, the quality of our business continues to improve through market share gains in flavored milk and spoonable yogurt, finished product exports up 33% for the nine months, and rapid growth in 3rd Party Distribution.
Fourth, we are seeing early signs of stabilization in our balance sheet, with net debt and inventory declining slightly compared with the end of the first half, alongside stronger operating cash generation and continued investment in our dairy production capacity. This was a record third quarter for Juhayna, and the underlying fundamentals of our business remain strong, supported by resilient consumer demand, a clear long-term growth strategy, and disciplined execution.
We remain confident in our outlook and in our ability to continue creating value for our shareholders. Thank you, and we now welcome your questions.
Thank you, Karim, so much. We will now begin the question and answer session, the Q&A. Please type your questions in the chat box or press the raise hand button if you wish to speak to the management directly. We will now leave a moment for participants, you guys, to ask their questions. Okay, we have got a question from Nada Hesham. She asks about the 2027 guidance for revenue and net income, and she also wants to know the expected volume and average selling price growth in 2027.
2027, I would say still a bit too early. I mean, probably we are expecting growth within the same range that we are seeing right now, but I cannot really comment on net income that far ahead. I mean, there are lots of factors in play to decide right now, so I can give that perhaps later on, early 2027, but right now it is quite difficult. What is the other question? I am sorry, Talaat, can you repeat the other question? Because it was guidance 2027, and what else?
She wanted to know the expected volume and average selling price growth in 2027.
It's still tight. I mean, the way I see it would be close to 2026, perhaps a little bit lower, just a small bit lower. That's how I see it right now, but I mean, we're still finalizing figures.
Nada also has another question. She asks about the CapEx plan for 2027 and 2028, and asks if there's going to be any delays in it since the interest rates may be higher for a longer period.
Honestly, I have been working with the entire management of Juhayna about the CapEx plan because we're trying to be very flexible, and I don't want to say we change it almost every six months now, depending on the rates, the FX, and the interest rates, but we're doing our best. Yeah, we're sticking to the, let me say, the average that we've been working with for the past few years, given that we said 2026 will be lower, and it is lower. I don't think we'll close the year this year above EGP 2.5 billion in CapEx. The next two years, let's say an average of EGP 3 billion-EGP 4 billion. Again, I'll give a clearer target as we finalize our budgets and see where the dollar lands end of year. There has been lots of improvements after reaching the all-time record, the 56 to the pound. We're at 53.
I just want to see where we're going to land by December. But again, the average is EGP 3 billion-EGP 4 billion.
Okay. Ahmed Khaled has got another question. He has two questions, actually. His first question is, can we get an idea on why Juhayna lost some market share in the juice segment, plain milk, and drinkable yogurt?
Okay. The thing is, I do not want to put a lot of weight on market share. When it is like a 1%-2% movement up or down, I am okay with that. I usually look at the general trend of the market share, and that is what I care about. So if we are in the area that we usually like, for example, for the milk, 60% area, ± 1% or 2%, it is fine for us. But the main reason for a little bit of decline, it was mainly in Q2. We did several price hikes, or not several, but like price hikes and change in our discount strategy, which meant that we had stronger pricing, but impacted a little bit the volume because other players did not follow suit. But it took us a little bit to recover from that.
We lost a bit of market share, and we are recovering it as we move forward. I think our market share is better than Q2. But again, I do not want to put a lot of weight on better or worse by 1% or 2%. It is not a big deal to me. Juice, we are coming from a long way. We were a distant number two. Now we are either one or two, and we are always competing on that front. Plain milk is the only one that, I mean, the market share, I would say, there was a good drop in Q2, and we recovered a lot of it by now, and we are at the 60% mark, which we always say that this is where we think Juhayna should always stand.
Ahmed would also like to ask a second question. He asks regarding Concentrates and Concentrates. We know that it is not your very usual business, but is there any idea on its global trend or any potential new opportunity in the Concentrates area?
Yes, there are some developments. It is part of our usual, I mean, it is not the finished goods, but it is part of our business model, and we care about it, just like the volatility makes it very difficult to predict it. Right now, let me say, the forecast for the global trends that we have seen in different exhibitions and different meetings we had with several players. Prices continue to fall, and it seems they are going to continue falling next year. Perhaps the good news here is that actually all fruit or fresh fruit, the raw material here is going to also fall in price, and it is expected in Egypt to fall in price apparently even further than the concentrate price, which might create an opportunity for the business to improve the margins.
Salma Abdelhay also asks about the CapEx, about how is it going forward, any plans to change it in light of the elevated interest rates and high FX rate? Do you have anything you wanted to add, Mr. Tarek?
Yeah, of course. We always do that. I mean, we did that this year. We had a much higher CapEx or a more ambitious CapEx plan, and we cut it down significantly, and we waited to see how the dynamics in the region will go. Based on that, we moved and we shifted the importance of some projects. So we are always very dynamic about the CapEx plan related to the interest rates. If you guys recall, at the beginning of the year, we disclosed the figures, and right now, we are actually, like Karim said, we are at EGP 1.7 billion. I mean, this is nine months. It should have been much higher by now, but we are quite flexible when it comes to the CapEx plan, given our capabilities and given also that we are very aware of the associated costs of the CapEx.
Okay. Mariam Ahmed also has a question. She is asking, is there any planned price hikes till the end of the year in Q4?
Yes, of course. I mean, we already doing some changes to the price and discount again, and I think the entire market did that. I mean, we just waited to see where things are heading towards. But of course, yes, there is some changes to the pricing scheme of Juhayna.
Can we elaborate more? I do not know if we are allowed to, but I think we can say that we already did some price increases last Saturday.
Yes, actually last Saturday.
But we will not further disclose what areas.
Yes, it is happening this month. Some happened already, some might take place few weeks or a week or something. But yes, we are aware of the cost structure and the change in price caused by all of the dynamics that are taking place.
Okay. Youssef has a question, Youssef Said. He asks, is there any guidance regarding Q4?
Usually Q4 is weaker than the rest of the year. Last Q4, we managed to break that cycle in Q4 2025. I would say we are trying to make Q4 a normal part of the business in terms of the figures, and we expect it to be the same place like the rest of the year. I mean, I do not want to give a single digit or like a factor because again, like Karim was saying, there has been a huge impact on our P&L coming from the FX. Granted that we are active about that, and we are moving the balance sheet to be more dynamic, so whenever we see the FX moving in a direction, we make sure that we try to counterbalance it and have the flexibility.
But it is a factor, but in the end, I am just saying that it is in the kind of the same run rates that we have seen in the first three quarters.
Very good. Nada Hesham also has another question. She asks, "Do you expect any changes in your working capital management? Any plans to stockpile more given the current situation?
Regarding the working capital, there was a question, I want to get back to that. There was a question or like a general statement about our working capital levels in Q2, and we declared back then that this was stockpiling, and we were going to bring it down towards the year end, a little bit in Q3 and more in Q4. We actually managed to achieve that. We knocked off around seven days in the inventory days on hand, and there is more to come. This has improved actually our working capital facilities. The working capital debt has been decreasing since Q2. All good signs of how we're thinking about working capital.
Stockpiling more, I highly doubt it because let me say the situation, at least if it continues in the same intensity, is becoming more of a norm rather than something new, like the same that happened kind of with the Russian-Ukrainian war. It became part of the normal business, so no one factors this in any cycle. It's the same for us right now. If things remain as is, we're not planning to change our stock. On the contrary, like I said, we're going to bring it a little bit down by year end.
Nada also has another question. She's asking if you have discontinued any products, and if yes, then why?
You mean this year, Nada, or generally?
I think she means this year. Yeah, this year. She means this year.
I do not recall anything that is There are some products that have been downscaled significantly, but I do not think we discontinued anything.
Limited edition. Oh, yeah.
I mean, limited edition is not discontinuation. It's like a limited edition product. But, yeah, I think this third yogurt comes to mind that it's at a very low point. That's the one that comes to mind, honestly, other than the limited editions, but nothing else. Some products go out for a while because of reformulation or rebranding, so you might not find it on the shelf for a while, but they come back. But so far, there has been nothing of, I would call discontinuation. However, we're always looking for products that we might, I wouldn't say discontinue, but that needs fixing. So, yeah, that's my answer to that.
Nourhan Wafa has also a question. She's asking, "Following the milestone on the 3rd Party Distribution front, what is the annual growth do you expect 3rd Party Distribution to reach over the next three to five years?" And she wants you to please elaborate more on the margin of this segment.
Growth is quite promising. I wouldn't say five years. Five years, Nourhan, is quite a long time right now. But generally, we're doing fine. Like I said before, we are looking for players that fit our strategy and our goal. You'll find a lot of mix and match when it comes to who's with us on the 3rd Party Distribution, because sometimes we bring someone in and they not share the same vision or the share ambition with us, so we change that to more profitable clients or partners. Let me say partners, better, the better word here. But growth, it depends on us finding the right mix as we go. The ones we have right now with us are very ambitious. I'd say 30%-40% growth is what they are seeking. And then there is the incremental from the other new players.
Elaborate more on the margin of this segment. I'll pass on that one because the margin differs from a client to the other, industry to the other, and also there are some confidentiality matters binding us in the agreements to disclose these figures.
Okay. I have got a question from myself.
Yeah.
I wanted to know more about Juhayna's integration into the Saudi market. How is it going? What is the plan? Because I know it is a big market. When do we expect-
Yes, it is a big market. It is a tough market. We have had a lot of conversations with the investors and analysts about the difficulty of cracking this market, which is, of course, a very true case. Our volume is growing. Our business is growing there. We are getting better and better coverage. We are getting better and better integration with our distributor there. These are all good factors. Just the fact remains that these type of things require time. It is not just spending. There is a time aspect there. Because it is exactly the same when we see a new product entering Egypt through us, like, for example, Gorilla Energy Drink, and the time we take a little bit for the customer to know it better, to get to try it, that kind of activation. So we are in that process.
Of course, like I said before, we were capitalizing a little bit on the Egyptian community there that knows our product and also the Saudi people who are familiar with Egypt and they come here and try our products. So this is part of it. I do not want to get into a lot of details, but there was part that was related to clearing regulatory hurdles when we were entering the market. The normal process, you are entering a new market, yes, you do your due diligence, everything, but then you get surprised by a certain rule that was overlooked here or there, and you try to fix that quickly. You start noticing different kind of, let me say, trends in the consumer preferences or taste.
These are all factors that, unfortunately, you have to learn no matter how much research you do, who you know, but you have to learn on the ground on a bigger scale. I think we are getting the hang of it quarter-over-quarter. Our volumes keep growing there. Still, I am not saying it is perfect. I am not saying that we are satisfied with what we have reached, but there is a lot of work to do. Again, it is like you said, it is a very big and difficult market, and we are capitalizing on our experience in that field to make sure that we are a significant player there.
Very good. I have got another question. It is in regards to the juice segment.
When I check or when I see the juice segmental analysis that you disclose in your financial statements, I found that the EBITDA margin of the juice is increasing heavily. Is there a reason for that? I think I estimated it when I checked it was 15% this year, this quarter, which is more. It is just becoming more and more.
Yes. Juice was one of the segments that we were not happy about its performance in terms of profitability, not in terms of the sales. The sales is good. The demand is good. The thing is that at some point of time, some of the concentrates we had, that we import, were at a very high price level. Pricing or the increase in pricing of juice has remained very, very low for so long. Let me say that some juice segments or like juice products that we had were sold at prices that, I do not want to say are no longer relevant, but are quite low to the current market structure. We have been changing that, trying to improve it and improve the margin and improve also the mix of the juice, and that is another thing.
I am glad that it is noticeable on the P&L for the community. Yes, we are aware this is a very conscious decision that we are making to make the juice segment more profitable.
Okay. I do not think there are more questions, so we can wait just a minute if anyone wants to add another question or ask the management anything. Okay. As there are no more questions, I would like to thank Karim and Tarek for their time and for this call. Thank you, and now we are going to conclude the call, and we are going to give them the floor if they have any last remarks.
Yeah. I just want to say something about the year, given that we are in mid-November. Back in January, we honestly went into the year, we were very optimistic about the volumes that were expected to deliver this year. Honestly, also, we expected a very quiet and smooth sailing in 2026. It proved to be anything but that. It just gave me a little bit also of I remain optimistic because given all of that happened, the changes in prices earlier than expected, higher inflation, changes in FX, all of that, we managed to navigate all of this and deliver so far, I would say, to the point, to the I mean, these are the figures that we expected. We were not deviating from our expectations, and I am happy with these results. I am happy with the volume and the growth in the top line.
25% in such a year is, actually in any year, is good. Us reaching Q3 EGP 10 billion in net sales is a figure that we also we consider it like, again, it is a milestone. It is always EGP 10 billion sounds very good. So we are happy with that. The volume is growing. We recorded in this year, three months, we recorded all-time high and we broke that record three times this year. We are happy with that. The flow of the business itself, with the exception of when I mentioned that May was a slow month right after the price increase, but, and during the war, but the volatility of the business is quite low. We managed to deliver the same volume with the, like, gradual increases throughout the year. So this is also something that we are happy with.
Fluctuation in profitability between quarters is not as high as it used to be, and this is also us managing the business in a different way, in a more stable way. I just want to reflect on that because as usual, the year proves to be very challenging. But again, we are up to the challenge, and we are up to delivering the results that we usually promise our investors at the beginning of the year. Thank you all.
Very good. Harsh, you can It is me or Karim. We are going to send you the transcript if you need it. Now the call, let us say, it has concluded, and I would like to thank everyone for attending, and I would like to thank again Karim and Tarek for this call.
Thank you, Talaat.
Thank you, Talaat.
Thank you, everyone.