CAIRO POULTRY COMPANY S.A.E. Cairo Poultry Company
9M21 Earnings Release
Cairo Poultry Company Reports 9M21 Results; Higher Revenues on a Mix of Better Prices & Volumes
Key Results Highlights of 9M21
18% | 25% | 2% |
Increase in Revenues | Increase in COGS to | Decline in Gross Profit |
to EGP3,653 mn | EGP2,943 mn | to EGP711 mn |
EGP308 mn | Net Profit |
EBITDA with | EGP123 mn with |
8% Margin | 3% Margin |
November 2nd 2021| Cairo | Cairo Poultry Company (POUL.CA on the Egyptian Exchange), reported its results for 9M21. Revenues for the period hiked 18% over the same period last year reaching EGP3,653mn. Such increase came on the back of higher feed & processing prices in addition to broiler chicks and live bird volumes. However, the increase in prices was subdued with the rise in costs of inputs resulting in a slight decline in gross profit by 2% to reach EGP711 mn.
EBITDA declined 8% over 9M20 to record EGP308 mn at a margin of 8% in 9M21 compared to 11% recorded during the same period last year. Yet, net profit increased 10% in 9M21 to reach EGP123 mn with a NPM of 3.4%, compared to EGP112 mn at a NPM of 3.6% recorded in 9M20.
Results continued to be impacted by the rise in global commodity prices which saw their peak in May 2021, such conditions are still accompanied by soft demand obstructing any price increases that would offset the increase in costs.
CAIRO POULTRY COMPANY - EARNINGS RELEASE 9M21 | Page 1
Cairo Poultry Company
9M21 Earnings Release
Sectoral Performance
Feed Division:
Feed volumes dropped 16% in 9M21 compared to 9M20. Such drop is mostly attributed to the slowdown in demand across the 3 feed sectors as rising commodity prices are discouraging farmers to grow. The greatest drop was in cattle feed by 30%, while poultry feed volumes declined by 12%. For 3Q21, volumes declined by 20% over 3Q20, yet increased 4% over 2Q21. With regards to prices, 9M21 average prices jumped 32% over the same period last year, driven by the increase in global commodities prices which directly affected the prices of raw materials. And due to lower demand in the market, the increase in costs was only partially passed on to the selling prices. Accordingly, EBITDA margin recorded 6% in 9M21 compared to 8% during 9M20.
Poultry Division:
On the back of lower supply in the market due to less rearing activities, parent chicks' prices jumped 30% during 9M21 to stabilize at EGP63/ chick coming from a low base of EGP48/ chick during 9M20. On the other hand, broiler chicks' prices dropped 22% over 9M20 reaching EGP6.7/ chick on the back of lower demand as farmers are still refraining from growing poultry due to the hike in price of inputs, while prices of the end product are still not reflecting the increasing costs. Whereas, live bird prices stabilized at EGP24/k.g during 9M21, compared to EGP23/k.g during 9M20.
During 9M21, broiler chicks' and live bird volumes jumped 59% and 51% respectively over 9M20. The increase in broiler chicks is mainly attributed to higher efficiency in the performance of parents chicks' (ODO/HH) as well as the favorable rearing conditions, resulting in lower mortality rates, in addition to phasing of production cycles. With regards to live birds, such jump came on the back of CPCs' shift in the sales strategy towards directing more volumes to the external market instead of selling to the processing unit. On 3Q basis, such volumes increased 12% & 23% respectively 3Q20. Accordingly, EBITDA margin recorded 5% during 9M21 compared to 8% in 9M20.
Processing and Further Processing (Koki):
As Koki continued to focus its selling strategy on higher profitable products by targeting higher price points, overall volumes dropped 13% compared to the same period last year. Such drop was driven mostly by 57% decline in frozen chicken sales, yet with 12% increase in further processed volumes. On Q-o-Q basis, 3Q21 volumes declined 7% compared to 3Q20, yet increased 9% over 2Q21. With the mentioned shift in strategy, Koki was able to increase the overall average prices by 17% over the same period last year. In addition to the price increases, Koki also benefited from the low prices of live birds which enabled the sector to record an EBITDA margin of 7%, up from the 5% recorded in 9M20.
CAIRO POULTRY COMPANY - EARNINGS RELEASE 9M21 | Page 2
Cairo Poultry Company
9M21 Earnings Release
Financial Performance
Revenues for 9M21 hiked 18% over the same period last year as a result of higher feed & processing prices coupled with an increase in broiler chicks and live bird volumes. Yet COGS witnessed a significant increase of 25% over the same period last year, resulting in a slight 2 % decline recording a GPM of 19% compared to 23% during the same period last year. Such decline in margin is mainly attributed to the rise in prices of global commodities resulting in increasing the prices of inputs. Yet, for 3Q21, GPM stood at 8.6% compared to 7.3% and 7.2% in 3Q20 and 2Q21 respectively.
SG&A expenses increased 13% over 9M20 due to higher sales, distribution and general expenses, yet representing 6.7% of total revenue down from 7% recorded in 9M20. Other operating income dropped 7% during the same period. As a result, 9M21 EBITDA declined 8% compared to 9M20 to reach EGP308 mn achieving a margin of 8% down from 11% recorded in 9M20. Yet for 3Q21, EBITDA jumped 40% over 3Q20 recording a margin of 9% compared to 7%.
Interest expense for the period dropped significantly by 44% to record EGP27 mn compared to EGP49 mn during the same period last year. Such drop came on the back of lower interest rates implemented by the CBE throughout FY20.
The company recorded no investment income during 9M21 compared to EGP13mn in 9M20 coming from the sale of CPCs' 27% stake in the Egyptian Company for Starch & Glucose (ESGC).
9M21 net profit recorded EGP123 mn witnessing a 10% increase over 9M20. Similarly, 3Q21 net profit recorded EGP43 mn, achieving a growth of 26% and 55% over 3Q20 and 2Q21 respectively. NPM stood at 3.4% compared to 3.6% during 9M20. Whereas 3Q21 NPM recorded 3.5%, compared to 3.2% recorded in 3Q20 and 2.2% in 2Q21.
On the balance sheet level, cash conversion cycle was maintained at a healthy level of 47 days lower than the 52 days recorded in 9M20 as the company is efficiently managing the inventory levels as well as balancing payables and receivables.
Outlook
As a consequence of the slowdown in rearing activities throughout 2021, CPC expects a shortage in the supply of live birds and chicks during the last quarter of the year. Accordingly, prices should be on the path to correction and normalize at higher levels than the prices recorded during 9M21. On the other hand, with commodity prices cooling-off from their peaks in May 2021, we expect margins to improve in the poultry business during 4Q21. For, the processing business, we still expect improvement in volumes and margins on the back of slight recovery in the economy and the retail business activity.
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Cairo Poultry Company 9M21 Earnings Release
Revenues (EGP)
Financials
Income Statemen | 9M21 | 9M20 | YoY | 3Q21 | 3Q20 | QoQ | ||||||
Revenues | 3,653,012 | 3,085,355 | 18.4% | 1,227,067 | 1,037,845 | 18.2% | ||||||
COGS | -2,942,557 | -2,362,170 | 24.6% | -985,471 | -822,938 | 19.8% | ||||||
Gross Profit | 710,455 | 723,185 | -1.8% | 241,596 | 214,907 | 12.4% | ||||||
GPM | 19.4% | 23.4% | -4.0% | 19.7% | 20.7% | -1.0% | ||||||
G&A | -120,922 | -105,142 | 15.0% | -43,492 | -35,854 | 21.3% | ||||||
S&D | -124,375 | -111,096 | 12.0% | -44,932 | -35,485 | 26.6% | ||||||
Other Operating | 67,271 | 72,152 | -6.8% | 23,422 | 24,380 | -3.9% | ||||||
Income | ||||||||||||
EBITDA* | 307,758 | 334,797 | -8.1% | 105,837 | 75,673 | 39.9% | ||||||
EBITDA M | 8.4% | 10.9% | -2.4% | 8.6% | 7.3% | 1.3% | ||||||
Depreciation | -307,829 | -302,464 | 1.8% | -103,345 | -102,011 | 1.3% | ||||||
Operating Profit | 224,600 | 276,635 | -18.8% | 73,249 | 65,937 | 11.1% | ||||||
OPM | 6.1% | 9.0% | -2.8% | 6.0% | 6.4% | -0.4% | ||||||
Interest Expense | -27,069 | -48,556 | -44.3% | -8,661 | -10,107 | -14.3% | ||||||
Investment Income | 0 | 12,474 | - | -1,113 | 0 | - | ||||||
FX Gain/ Loss | 0 | -1,278 | - | -687 | -3,405 | -79.8% | ||||||
Other Income/ Exp. | -24,616 | -76,153 | -67.7% | -2,956 | -10,060 | -70.6% | ||||||
PBT | 172,915 | 163,122 | 6.0% | 59,832 | 42,365 | 41.2% | ||||||
PBTM | 4.7% | 5.3% | -0.6% | 4.9% | 4.1% | 0.8% | ||||||
Deferred tax | 5,606 | 1,668 | 236.1% | 5,606 | 525 | 967.8% | ||||||
Income Tax | -55,793 | -52,770 | 5.7% | -22,907 | -9,173 | 149.7% | ||||||
Net Profit After Taxes | 122,728 | 112,020 | 9.6% | 42,531 | 33,717 | 26.1% | ||||||
NPM | 3.4% | 3.6% | -0.3% | 3.5% | 3.2% | 0.2% | ||||||
*Adjusted EBITDA |
Financial KPIs (000 EGP)
1,264,588 | 52,719 | 4.5% | 42,531 | ||||||||||
111,098 | |||||||||||||
1,227,067 | 90,823 | 105,837 | |||||||||||
27,478 | 3.5% | ||||||||||||
1,161,357 | 17,258 | 9.6% | 8.6% | ||||||||||
7.2% | 2.2% | ||||||||||||
1,092,809 | |||||||||||||
1.6% | 4Q20 | 1Q21 | 2Q21 | 3Q21 | |||||||||
4Q20 | 1Q21 | 2Q21 | 3Q21 | -8,024 | -0.7% | ||||||||
4Q20 | 1Q21 | 2Q21 | 3Q21 | EBITDA* | EBITDA % | Net Profit | NPM% |
CAIRO POULTRY COMPANY - EARNINGS RELEASE 9M21 | Page 4
Cairo Poultry Company 9M21 Earnings Release
Head Office
32H Mourad st. Giza Egypt
Investor Relations
Haitham El Shaarawy Investor Relations Manager
Tel: +202-35717753
About Cairo Poultry Company
Cairo Poultry Company (CPC) is the region's leading vertically integrated poultry company with a business model based on expert control of the supply chain and operations covering all steps of the production cycle, including grandparents, parents, hatcheries, broilers, processing, value added and starch and glucose products. Thanks to star brands like Koki and Americana Meats, we are Egypt's key player in the market for retail and value-added food sales in Egypt, offering a wide variety of chilled, frozen, and value-added products to individual and institutional clients alike.
For further information, please contact:
Haitham.shaarawy@CPG.COM.EG
Shareholder Information
Reuters: POUL.CA
Bloomberg: POUL.EY
Number of Outstanding Shares: 479,001,600
Cautioning and Forward Looking Statements
This document was prepared by CPC and is intended for discussion purposes only. It does not constitute an offer or recommendation to enter into any transaction by CPC, its shareholders, affiliates or its offers, directors or advisors. If you decide to enter into a transaction you do so in reliance of your own judgment. When making an investment decision, you should rely solely on the final documentation relating to the transaction and not this presentation. CPC and its affiliates shall not have any liability for any information contained in, or any omission from, the presentation or any other written or oral communication transmitted to the recipient(s) and they disclaim all liability for any direct, indirect, consequential or other damages or losses incurred by the recipients or any third party that arise from any reliance on this document or its accuracy.
CAIRO POULTRY COMPANY - EARNINGS RELEASE 9M21 | Page 5
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CPC - Cairo Poultry Company SAE published this content on 03 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 November 2021 09:41:02 UTC.
