Juhayna for food industries achieved EGP 2bn sales during the third quarter (3Q) of 2019, recording 6% revenue growth, which proves the company's ability to sustain its leadership in both dairy and juice markets, despite all the existing challenges in the market. However, the low consumer purchasing power is the market's biggest challenge limiting its growth. Juhayna announced its consolidated results for the 3Q 2019, reporting a 7% year over year (YoY) rise in total consolidated revenues to EGP 5.792bn, while net profit reached EGP 291m during the first nine months (9M 2019). Through the 3Q of 2019, consolidated revenues reached EGP 2.041bn, an increase of 6% compared to the same period last year. The company's net profit reached EGP 111m. The highest contributors to the top line are the dairy and yogurt segments, representing 49% and 23% of revenues, respectively in 3Q 2019. As for 9M 2019, dairy and yogurt also remained the highest contributor at 48% and 24% of revenues, respectively. Juhayna has attained EGP 384m profits in 9M 2019, compared to EGP 360m during the same period last year. However, due to the end of tax exemption period for some of the company's subsidiaries, as well as applying the new healthcare insurance fees, the net profit reflected in their financial statements was negatively affected by EGP 93m, to reach EGP 291m. Drawn from the fact that Juhayna operates in a highly competitive environment, the company's management believes that it is in the best interest of shareholders to suspend disclosure of detailed segment analysis information. Pharos Holding stated that 2019 was a tough year as Juhayna's muted sales growth reflected the overall pressure witnessed in the food and beverages sector (F&B). However, Juhayna has positioned itself to benefit the most from the expected recovery in food expenditure driven by their sustained leadership position and strong brand equity across all three segments, adaptive product portfolio catering to both premium and mass consumption, and flexible pricing policy to allow for the pass-through of expected exchange rate weakness or rising raw material costs. The factoring of steady topline growth and stable margins over the forecast period has resulted in the downgrade of JUFO'S FV to EGP 11.02 per share, but with an overweight recommendation after the recent drop in share price.
