Domty 1Q2020 net profit rose 11 % year on year

HIGHLIGHTS OF THE CONSOLIDATED INCOME STATEMENT:

(Numbers in EGP million):

Cairo, 31 May 2020

Arabian Food Industries Company Domty S.A.E. (DOMT.CA on the Egyptian Exchange), Egypt's largest cheese manufacturer by market share, announced today its consolidated results for 1Q2020.

Domty achieved a net profit of EGP32.1 million in 1Q2020, after achieving sales of EGP744.8million.

Commenting on the1^st quarter's performance, Domty Vice Chairman Mr. Mohamed Eldamaty said:

At first, we wish everyone is safe in these exceptional circumstances the world is going through, hoping that life will return back to normal soon.

Throughout the year and up to this moment the company, like all companies, went through extraordinary circumstances that changed the Fundamentals of traditional management and forced everyone to change a lot of its plans and goals. The year 2020 started weaker than expected January and February were low sales same as most sectors/categories due to weak purchasing power. Sales started to recover significantly with the beginning of the Corona crisis in mid-March, especially in the cheese segment, which achieved massive growth rates due to the consumers panic stocking in the beginning of the crisis. On the other hand, sales of baked products and juices declined in general as a result of the closure of schools and universities. Despite all of the above the company was able to achieve a total growth rate of 13%, which is higher than the growth rate of the Egyptian FMCG market hence reflects the company's big opportunities to grow through diversified portfolio/ product range.

Cheese Category:

After the decline in the third and fourth quarters of 2019 due to some policies that proved not to be very effective. We were able to restore sales figures & credit goes to the successful launch of the Yellow Cheese which was perceived highly by the consumers hence the company achieved a growth rate of 7% in direct retail, wholesale and organized trade/Modern trade, consequently  restored the market share that was lost (2 % in the cheese segment) over and above the company is operating with its maximum production capacity in mozzarella cheese waiting for the commencement of the  new line by the end of the second quarter as we faced a shipping delay a result of  the current conditions.

Juice Category: The Company managed to achieve a growth rate of 5%, which is more than the market that fell by more than 5%. We were able to increase our market share to 8% in Cairo hence being the third biggest player nationwide.

Bakery Category: The Company was operating at 100 % capacity utilization by the end of January with an increasing demand right before schools closure. The third production line was installed and is awaiting the return of schools/universities in order to start operating. God willing.

The company spent more than EGP 21 million in TV advertising, which is a non-recurring figure and had an impact on the decline in profits, yet it was required to restore growth rates & brand equity which was achieved successfully.

On the other hand, the executive management of the company decided in beginning of the crisis to increase the company's stock of raw materials & packaging materials by more than a month to the usual rate, in anticipation of any delay in shipping of raw materials imported from Europe, America and New Zealand.

The executive committee had met in mid-March and made decisions regarding the precautionary measures applied within the company to prevent Corona virus outbreak, these procedures were disclosed and sent to the stock exchange.

The company also made a number of strategic decisions for the coming period:

1-   Signing a contract for the production and packaging of Rani juice in the tetra pak packages to take advantage of the vacant capacity in the juice factory

2-   Introducing the Fino Bread Product on March 31 as a  soft launch within the Bread category, which was

highly accepted by the Egyptian consumers hence led & encouraged the company to add more bread types & SKUS that was launched end of the holy month of Ramadan.

This initiative is expected compensate for lost utilization of the two bakery production lines.

In these difficult circumstances, there are some positive aspects, including the decrease in the prices of the main raw materials such as skim milk powder (a decrease from USD 3000 to USD 2300 per ton) and palm oil (a decrease from EGP 14000 to EGP 11000 per ton), in addition to the decrease in the interest rates by about 3%, which will result in an increase in the company's profitability in the coming period.

In general, we cannot forecast the company's sales or profits till the end of the year. In April the company was able to achieve significant growth rates, but there was a decline in May, as Ramadan is not a season for most of the company's products in addition to the long (FEAST) holiday period in May.

Our goal now is to successfully introduce the bread product range while maintaining& securing our market share in cheese and juice categories plus restoring the sandwich sales volumes when normal life returns and school opens.

·    Sales Revenue breakdown for 1Q2020:

·    Consolidated Income Statement

For viewing the full set of financials kindly visit domty.org

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About Arabian Food Industries Company Domty S.A.E.

Domty, founded in 1988and headquartered in Egypt, is a leader in the growing Egyptian cheese and juice market. The Company manufactures markets and distributes a range of branded white and processed cheeses and juice products, with a family of nearly 200 SKUs under a brand portfolio including Domty, Damo, Gebnety and Bravo. Domty is a household name and the number-one cheese producer in the nation by market share. The Company sells to tens of thousands of retail and business customers as well as to more than 46 export destinations. Learn more about Domty by visiting Domty.org

Contact

Ahmed Mohy Eldin
Investor Relations and Corporate Affairs Director
T: +202- 010 - 0555 2235| ahmed.mohy@domty.org