Juhayna profits up 64% as costs fall

By Eliot Beer

- Last updated on GMT

Related tags: Generally accepted accounting principles, Profit, Milk

Juhayna has partnered with Danish dairy firm Arla to distribute its butter, cheese and cream products in Egypt
Juhayna has partnered with Danish dairy firm Arla to distribute its butter, cheese and cream products in Egypt
Egyptian dairy and juice producer Juhayna saw profits rise 64% year-on-year to US$8.3m in its second quarter, with total revenue of US$140.6m, up 16%.

These results mark a significant turnaround from the same period in 2014, which saw net profit fall 67% to US$5.1m, as Juhayna suffered from rising costs, particularly of milk. This year, the company said falling costs had allowed it to improve its profit margin, with overall gross profit up 49% to US$49.2m.

The firm saw growth across all its business segments, with dairy and yoghurt, together making up 77% of Juhayna’s revenue, growing 15% and 20% respectively. The company, which signed a deal in May with Danish dairy giant Arla to form a joint venture​, is Egypt’s largest dairy producer.

New cows on the block

On an operational level, our efforts for increased vertical integration and improved operational efficiency were most recently advanced with the opening of two new distribution centres in Giza and Minya governorates, bringing Juhayna’s total number of distribution centres to 28 nationwide. Meanwhile, the arrival of our first batch of 650 German Holstein cows marked a significant milestone for our dairy farm and helps ensure the quality of our products​,” said Juhayna chairman and CEO Safwan Thabet.

On that note, Juhayna’s recently announced joint venture with European dairy cooperative Arla Foods will further our ability to diversify our product range and help us maintain our promise of providing customers with none other than the best​,” he added.

Ramadan yoghurt boost

Agriculture, representing 3% of Juhayna’s turnover, was the only division to post a gross loss in the firm’s financial statement, costing US$890,000 despite increasing turnover by 49% to reach US$3.96m. Of its three main business segments, yoghurt posted the largest gross profit margin at 47% of its US$40.4m in sales, driven by strong demand during Ramadan according to the company, and up 14 percentage points from a year before.

Dairy saw a 33% gross margin, an increase of eight points year-on-year, with juice at 31%, up just one point. Juhayna’s small concentrates business brought in just US$1m in sales, but boasted a 77% gross profit margin, up 29 points.

The firm’s partnership with Arla will see Juhayna distribute the Danish firm’s butter, cheese and cream products, segments which the Egyptian firm does not cater to. Arla executives suggested the deal could bring in around US$100m in revenue within five years. 

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