Good morning and good afternoon, everyone. Thank you all for joining, and welcome to Juhayna Food Industries' second quarter 2026 results call. From Juhayna's management, we are pleased to be joined by Mr. Tarek Elwan, CFO, and Mr. Karim Ibrahim, Head of Investor Relations. I would like to remind you all that if you have any questions, please type them in the Q&A box at the bottom of your Zoom screen, or raise hands to speak directly with management. With no further delays, I will now hand over the call to Juhayna's management. The floor is all yours. Thank you.
Good afternoon, everyone, and thank you for joining us today. We are pleased to be with you to discuss Juhayna's second quarter and first half 2026 results. Let me start with the headline numbers. First half revenue grew 25% year on year, with second quarter revenue up 23%. Net profit grew 23% for the half and 48% for the quarter alone, figures that reflect both strong volume-led growth and resilient profitability in a challenging cost environment.
The second quarter extended the strong momentum we saw earlier in the year, with record high revenues, continued volume growth across our core categories, and disciplined execution of our long-term strategy. Despite a challenging geopolitical and macroeconomic backdrop, we delivered another quarter of exceptional local sales performance and record exports of finished goods, supported by strong summer demand for chilled and juice products and the continued expansion of our third-party distribution business.
There are four things we want you to take away from today's call: continued volume-led growth, market share gains that validate our commercial strategy, resilient profitability despite cost pressure, and an improving quality of business as we scale exports, distribution, and new categories. Let me start with our financial performance for the quarter and the half. In the second quarter of 2026, Juhayna delivered record high net revenues of EGP 9.1 billion, representing a 23% year-on-year increase.
For the first half, net revenues reached EGP 17.7 billion, up 25% year on year. This performance was fueled by double-digit volume growth across our fermented and juice segments, supported by single-digit price adjustments and record high export sales of finished goods. Gross profit for the quarter reached EGP 2.2 billion, maintaining a healthy margin of 23.8%. For the first half, gross profit stood at EGP 4.3 billion, with a margin of 24.5%.
It's worth putting the year-on-year comparison in context. Concentrate prices were unusually elevated in the first quarter of last year, which lifted the prior year base to a level that wasn't representative of a normal operating environment. So part of this year's margin comparison simply reflects that high base normalizing, rather than any deterioration in our core business. Separately, we did see incremental pressure on input costs during the quarter from broader regional volatility in logistics and foreign exchange, which we factored into our cost planning as we went through the period.
Taken together, we view both of these as manageable, well-understood dynamics, and our margin base remains healthy. EBITDA for the quarter reached EGP 1.3 billion, up 20% year on year, at a margin of 14.3%. For the first half, EBITDA reached EGP 2.7 billion, up 15% year on year, at a margin of 15.1%.
The fact that EBITDA growth trails our 23% revenue growth in the quarter largely reflects a normal timing lag between rising input and logistics costs and the pricing actions we took to offset them. We moved early on pricing during the quarter, and as typical following a price adjustment, we saw a brief temporary softening in volume trends as the market absorbed the change before demand normalized within a matter of weeks.
We view this as a healthy sign of both our pricing power and the underlying resilience of consumer demand for our brands, and we expect the benefit of this pricing action to build further as it fully annualizes through the second half, alongside our continued procurement and cost discipline. At the bottom line, net profit for the quarter reached EGP 713 million, representing a net profit margin of 7.9% and a 48% year-on-year growth.
For the first half, net profit reached EGP 1.4 billion at a margin of 7.8%, up 23% year on year. On foreign exchange, while the first quarter was impacted by an FX loss, the second quarter benefited from a positive FX movement, resulting in a net FX gain of around EGP 66 million for the first half. Excluding this non-operational item, adjusted net profit for the half would have been approximately EGP 1.3 billion, still reflecting the strength of our underlying operating performance.
This result was achieved despite a meaningful increase in finance costs, which reached around EGP 573 million for the half, reflecting higher utilization of bank financing to support our growth initiatives. As a reminder, comparative figures for the first half of 2025 do not include the impact of the merger completed in February 2025. Turning to the operating environment.
The second quarter benefited from a seasonal shift in demand, with the summer heat driving a significant increase in consumption of chilled dairy and juice products. This built on the strong Ramadan-driven momentum we saw earlier in the year and helped sustain double-digit volume growth across our core categories. We also continued to gain share in several of our priority categories, and I want to spend a moment here because this is important evidence that our growth is coming from execution, not just market expansion.
Flavored milk led the way, with our market share increasing six percentage points to reach 60%, while spoonable yogurt gained two points to reach 32%, and juice gained one point to reach 32%. We did see some share softness in plain milk, down to 60%, and in drinkable yogurt to 41%, categories where we are actively recalibrating our commercial approach.
I'd also like to highlight one figure in particular. Third-party distribution grew around 176% year on year in the quarter. 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 lever going forward.
Moving to exports, and I want to lead with the quality of this growth rather than the headline number. While total exports remain affected by the normalization of concentrate prices, the underlying trajectory of our finished product export business continues to improve. Export sales reached EGP 787 million during the quarter, up 15% year on year, and EGP 1.2 billion for the first half, down 6% year on year.
In US dollar terms, exports reached $15.1 million in the quarter, up 14% year-on-year, and $23.8 million for the half, down 5% year-on-year. The half-year decline in total export revenue was largely attributable to lower concentrate volume and price, consistent with the trend we called out in the first quarter.
But finished product exports, the higher-value, more strategically important part of this business, continued to grow, with second-quarter USD revenues from finished goods rising double digits year-on-year. This shift in our export mix is helping cushion the impact of softer concentrate revenues and reinforces our commitment to building a more diversified and resilient export base.
Looking ahead, we expect increasing finished product volumes to further mitigate short-term volatility and enhance Juhayna's presence across international markets, and we continue to work on several regional partnerships that we believe will provide an additional boost to finished product exports. Turning to profitability and costs. Our SG&A ratio increased to 11.5% of sales in the quarter, up 0.1 percentage point year-on-year, and to 11.4% for the first half, up 0.3 percentage points year-on-year.
This increase reflects our operational expansion and proactive marketing strategy, including the continued growth of our Turkish Labneh range through the launch of two new flavor variants, as well as high-profile seasonal marketing campaigns that strengthened brand visibility during the summer season. Despite these minor increases, which are consistent with our strategy to invest in brand equity and market share, we remain focused on cost discipline.
Our ability to deliver healthy EBITDA margins while continuing to invest in brand building and distribution capacity demonstrates the effectiveness of our cost management framework. On the investment side, we continued to execute our expansion strategy announced in 2024. During the first half, we invested around EGP 1.3 billion in CapEx, directed toward strengthening our capabilities across manufacturing and distribution.
Net debt increased from EGP 6 billion at the end of 2025 to EGP 7.2 billion by the end of the first half, a 21% increase, primarily reflecting higher working capital requirements and the continued execution of our CapEx program. I want to be explicit about the inventory increase because we expect this to be a natural area of questions. We deliberately increased inventory by 40% during the half to around EGP 8.1 billion.
This was a proactive working capital decision, not a deterioration in working capital discipline, taken in response to ongoing geopolitical tensions and the risk of supply chain disruption, and it positions us with stronger inventory coverage entering the second half. Despite the resulting increase in net debt, our financial position remains strong, our leverage remains manageable, and we continue to generate the cash flow needed to support our growth ambitions. Before turning to the outlook, one brief update.
Towards the end of the quarter, Tiba for Trade and Distribution, the trading arm of our group, entered into an exclusive strategic partnership with Gorilla Energy Drink to officially launch the brand in Egypt. This strengthens Tiba's position as a regional distribution platform and reinforces our strategy of diversifying our portfolio.
Looking ahead to the second half of 2026, I want to share what six months of execution has taught us and why we entered the second half with confidence. Volume momentum remains strong across our core categories, and early second-half trends are consistent with what we saw in the second quarter. Our market share gains in flavored milk, spoonable yogurt, and juice validate that our commercial strategy is working, not just that the market is growing.
Finished product exports are accelerating, and we expect this trend to continue as our regional partnerships mature. Having moved early on pricing during the first half, we expect that benefit to build further through the second half, alongside our continued procurement and cost discipline. Importantly, we enter the second half with stronger inventory coverage, giving us confidence in our ability to serve demand without disruption.
Regional geopolitical developments continue to create volatility in input costs, 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 and give us confidence in our ability to execute through the second half.
To summarize, four messages should stand out from today's call. First, strong volume-led growth continues, 25% revenue growth for the first half, with 23% growth in the quarter alone. Second, our market share gains, particularly in flavored milk, spoonable yogurt, and juice, validate that this growth reflects our commercial strategy, not just market growth.
Third, profitability remains resilient despite cost pressure, with a healthy 24.5% gross margin and 15.1% EBITDA margin for the half, and net profit up 23% for the half and 48% for the quarter. Lastly, the quality of our business continues to improve through accelerating finished product exports, rapid growth in third-party distribution, and continued investment in capacity and new categories.
This was a record first half for Juhayna, and the underlying fundamentals of our business remain strong, supported by resilient consumer demand, continued market share gains, and a clear long-term growth strategy. We remain confident in our outlook for the remainder of 2026 and in our ability to continue creating value for our shareholders. Thank you, and now we welcome your questions.
Thank you so much, Karim, for the presentation and for the excellent set of results. I would like to remind you all that if you have any questions, please type them in the Q&A box at the bottom of your Zoom screen, and I will read them for management, or raise your hand to speak directly with management. We can start actually with Mariam Zureik. Following second-quarter results, can you share updated guidance on 2026 full-year revenue and net income?
I'm sorry, Mariam. Updated guidance for?
Yes, updated guidance for the full-year revenue and net income.
I think the run rate speaks for the guidance. I mean, I'm sticking to the guidance that I've said in the beginning of the year and after Q1. We're in the same area, and I think the run rate reflects our trajectory till the end of the year.
Okay. Thank you, Tarek. Another question from Abdulhadi Samari. "Congratulations on the results. We noticed concentrate prices remain stable while revenue increases, implying volume-driven growth. Do you expect volumes to remain high for the rest of the year?" That is regarding concentrates.
If this is regarding concentrates, there is not much that happened in concentrates. Prices are stable. We are selling more, yes, because we are pushing as hard as we could to liquidate the stock we have, and I think it is paying off. There is a little bit of demand that is increasing, but not as much as we would like to see it. But yes, I expect this to remain until the end of the year.
Thank you, Tarek. We have another question from Habiba Ibrahim. "What price increases have already been implemented, and by how much? Are you planning further price increases in 2026, and if so, what is the expected timing and magnitude? And finally, do you see any moderation in volumes after the recent pricing actions?
Okay. In April, we did some selective price increases, and we also played a little bit with the discounts in the market, and that definitely impacted our volumes in May. That is why actually I think that, inshallah, Q3 is going to be even better in terms of volume, because May witnessed a slowdown. I think the market, it was a bit of a reaction to the price increases.
However, we recovered in June, and that is a good thing. I mean, it just took us one month for the market to recover, because the prices were not really high. We did not push very strong the prices. We are not planning to have any price increases in 2026, most probably not, unless something else happens. I am just talking about business as usual. Nothing should change.
Supposedly, there are no price increases or further price increases in the energy prices, so there shouldn't be any further pricing in 2026. For me, I was more concerned about discounts rather than prices. However, we moved both in line with the expense or the cost increase in, or expected the cost increase in Q2.
Okay. Thank you so much. We have a question from Youssef Sayed. "When is the planned price increase expected to be implemented?" I think that's related, Tarek, to what you have been saying. "Over what period is the pricing strategy expected to take place?" A follow-up, "CapEx reached EGP 1.3 billion during the first half of the year. What should we expect for CapEx during the remainder of the year?" Finally, "Regarding the third-party distribution segment, does the company plan to continue expanding this business by adding new products to its distribution portfolio?
First question, price increases, like I said, there isn't any expected price increase to take place in this year.
Additional.
Additional, yes. What happened there? There might be next year, but it's still too early to tell when exactly. The CapEx part, I think we are expecting around EGP 1 billion, another EGP 1 billion in the second half of the year. Of course, we're going to see how it goes, but this is around a rough figure of our expectations. Regarding third-party distribution, yes, this is part of the strategy. We have alluded to that before, that this is something that we are planning to continue doing and continue growing in. We have a very strong distribution network, and we're trying to capitalize on it as a third-party distributor.
Thank you, Tarek. Another question from Mariam Zureik. "Given current higher debt levels, do you expect profitability to be impacted from current interest rate environments?
Well, good question. Honestly, we entered the year expecting more costs than that. Of course, the geopolitical situation does not help in that direction. We are stuck at 20. We are expecting more of a 17% interest rate till the end of the year. It is already impacting us, of course, interest expense for the company. I mean, I do not expect it.
We pivoted our profitability and our projections for the business, understanding that this is probably the interest rate for the coming few months in the year. We do not expect any adverse effects more than that, but we already took it into consideration, taken in consideration.
Okay. Thanks, Tarek. Another question from Habiba Ibrahim. "What is your outlook for key input costs, and could you quantify the contribution of each major input to the overall cost base? What proportion of your FX requirements is currently covered by export proceeds?
For the input costs, it is not an easy or cut-and-dried as a question, because there is a lot of volatility, and even the where I am benchmarking myself, because end of last year, end of last quarter, I mean, the prices were much higher than we expected for the quarter. This year, I think with things cooling down, this quarter, sorry, with things cooling down, prices starting going down, some, like if you guys remember, I was talking about, for example, raw milk, which is a very big factor of my inputs in general.
It was higher in the end of last quarter, beginning of this quarter, of end of Q1, beginning of Q2, and then started going down, which actually helped us with profitability. Some local also components, but nothing major, were higher and went down.
I think we're, I would say, with more stability in the region, prices are going back closer to normal. Some prices, of course, did not, or I think will be affected by the oil prices if they continue at higher levels, like the plastic components we have. But my major components are, I have to say, are under control or heading towards being under control.
The second question, the proportion of my FX requirements currently covered by export proceeds, I'd say somewhere around 30% or 25% of my proceeds cover the requirements. We're also trying to hedge against that in the sense that some of our inputs are being replaced with local players, or at least partially replaced. It's more of not the increase in the FX proceeds rather than also improving our input mix.
Thank you so much, Tarek. What is your CapEx? Another question from Habiba Ibrahim. What is your CapEx guidance for the next three to four years? What will the planned CapEx be primarily allocated towards? What revenue uplifts or cost savings do you expect from those investments, and over what timeframe?
The CapEx guidance for the next three, four years, honestly, we're changing a little bit in the CapEx plan, so I might or I'll have better visibility in Q3, because if you guys remember, we were talking certain figures that were being discussed previously. We revised that. This year definitely is lower than what we expected.
The major, I mean, I can focus a little bit more on a shorter timeframe. We have a couple of investments coming up in terms of new products or new investments where we continue to be committed towards the distribution part, like I said, which we're adding a lot of investments in terms of the vehicles and chillers, and also storage space.
My biggest investment that I was planning between this year and next year, I discussed that, it's regarding the farm, the milk part, the parlor, all of the supply chain there. We were discussing that was supposed to be this year, but given that we pivoted our plan, it's going to be more of like half this year or a bit less than half this year and the following next year.
And it is a big investment north of EGP 1 billion. So that's kind of the CapEx plan that I can see right now. I can give you more guidance or more clarity about it in Q3 because we're, again, we're re-pivoting the plan. The second question that Habiba has, the revenue uplift or cost saving you expect from these investments and over what timeframe?
The timeframe part, we are focusing on quick returns or quick revenue part or cost saving. I mean, I don't want to have very long-term CapEx. That is one of the reasons we kind of, I would say, extremely diluted our agriculture plan almost to nil because we thought the time horizon right now is not suitable and it is a very long one, so we thought we can do it over a very long period of time.
The other projects, like for example, the parlor one, will improve my cost for the milk very quickly. The Tiba distribution one has like immediate revenue impact. I think that we are trying to limit it to the same year or next year impact right away.
Thank you so much. We can move on just seconds. I guess we have another final question, I think, from Habiba Ibrahim. What is the current inventory coverage for key inputs and how has this changed over the past year? How many months of supply are currently covered?
Yeah, the point that Karim Ibrahim was making in the intro before the Q&A session is that when the situation started in end of Q1, and of course, when it was still intense in beginning of Q2, we were worried about major disruptions in the supply chain. I think in the last call, I did mention that we have already stocked up a little bit, or at least with the orders, and we are expecting higher stock levels by end of Q2, which is what materialized right now, and we explained that in the previous call.
Of course, we increased our coverage by almost one month for this period, almost, I mean, give or take. But other, of course, again, then, because almost half of my production is raw milk, so there is no more increase in production there or increase in inventory there.
But that is the average safety that I would think we took into consideration. I think also, or not think, we are planning, given the situation, to see decreases in Q4 this year. I think I also alluded to that in the previous call, because we think things are stabilizing right now in the region. If nothing else happens, then we should start reflecting the inventory buildup that we did in Q4 or Q4.
Thank you so much. We have a question from Pakinam El-Etriby. "Hello. What is the average cost of the skim milk powder you recently sourced, and how long is the existing inventory expected to last?
Let me say that we got it at a good competitive price, and that honestly was started even before the situation in Iran or the Gulf region. We started building up that stock, and it was because we saw a good price, and we went for it. I would say we are covered for probably till the end of the year in our stock.
Okay. Thank you so much. I think we have no further questions. I can just add a follow-up question, if you allow me, Tarek.
Sure.
Actually, I have two questions. One of them is on exports. You said that you are increasing your exports of finished products, right? Can you give us more light on which markets you are targeting at the moment? Is Libya a big pickup? Is it Saudi Arabia? Is it east or west, north or south? The second question-
Sure
Can you give us more light on the distribution business, 3PL, and where do you see it next year, inshallah?
Right. Let's take it. In general, Hany, we are focusing, and this is like a journey that we started in 2025, beginning of 2025, to ensure that the driver's seat is always for the finished goods, whether we're talking exports or we're talking local market. We want to make sure that this business is the one that's driving the volumes, driving the profitability.
Again, yes, we have concentrates. It comes and goes. It has impact, but I don't want to rely on it. It's very difficult to forecast. It's very cyclical, so we made sure that this is the plan. I think it has been so far, Alhamdulillah, paying off in terms of our growth in sales and our growth in profitability quarter-over-quarter since Q2 last year.
We've been growing both top line and bottom line, so we have a very The execution was good, and it is in line with what we see. I mean, we don't see a lot of surprises because we're controlling the volatility of the business in a better way. That being said, coming to the export, of course, our biggest two markets in terms of finished goods are Libya and Saudi Arabia. Libya, as we've discussed before, we sometimes we get some challenges with the payment plan there because it's not always on.
There are disruptions in the business there, not our business. I'm talking the general macro business environment. But whenever things are stable, we have a steady flow of progress there. A very wide range of our products are being exported there, so we're happy with the relationship. We have a good distributor on the ground.
Saudi Arabia, of course, we are new there compared to Libya. We're getting better at it. We're getting steadier at it, expanding the portfolio bit by bit. But the thing is, we see that there is a well reception, at least from the consumer there, for our products, and we're happy with that. Other than these two big markets, we have a little bit of course, business going on in our neighbors to the south in Sudan and in Palestine.
We're working with them, but of course, the situation also is not 100% stable. We're working on our usual European markets and the rest, but it's not big or steady compared to our region. The focus here is higher. Again, I would say, to sum it up, Libya and Saudi Arabia, and then our neighboring countries. That's in all the neighboring countries.
We're talking Sudan, Jordan, Syria, Palestine, a bit in Lebanon, and then Europe. That's for the finished goods. As I move to the distribution part, this is a big plan. It's a long-term plan. We have a very good coverage in the market. We have good reach. We have a lot of assets. Some of them are fully utilized.
Some of them, when we buy the assets, they're like half utilized or three-quarters. It's clear-cut that we want to reach full utilization rates in all of our assets, and then we move more to, why not have this as a steady income thing? We're moving in it. We're in contact with a lot of players. We're trying to add each quarter or a couple of quarters another player.
The reason that we don't want to rush into it in terms of the number, not in terms of the concept, is that also we want to make sure that whenever we add another new player, we stabilize the business with them first. Our salespeople are familiar and comfortable with it, and then we start introducing another one.
Because again, with increasing the number of SKUs of Juhayna, plus the new products, or the few new players that we add on, there is a lot of complexity and a lot of complications that take place in the operation level and on the sales level. So we try to move cautiously so we do not actually harm any of the players existing with us.
Okay. Thank you so much, Tarek, for the elaboration. Unless we have any other questions, I think that's it for today. Thank you so much for the presentation and for the excellent set of results. Hopefully, we'll see you, inshallah, in the third quarter.
Inshallah.
For everyone, have a great day. Thank you so much.
Thank you so much, Hany, and thank you everyone for attending the call. Appreciate it.
Thank you, Karim. Thank you, Tarek.
Thank you. Thank you.