Saif El Din Thabet, CEO and deputy chairperson at Juhayna Company for Food Industries, said that his company is preparing to start manufacturing products of Danish company Arla Foods. The products will be manufactured in one of Juhayna’s factories located in the industrial area in the 6th of October City in December and are to be sold in both Egyptian and foreign markets.
Thabet pointed out that Juhayna has the licence to sell Arla’s products in the Egyptian market through obtaining products from the international company. Technical steps for repairing Juhayna’s factory are about to be completed in order to add production lines related to Arla’s products.
In July 2015, Juhayna signed a strategic partnership agreement with Arla Foods—one of the prominent companies in the dairy industry— to establish a joint venture. The company targets to distribute and manufacture high-quality products of cheese, butter, and baby formula in the domestic market.
Sales activities were planned to launch in October 2015, but the project was delayed for several times. Arla owns 49% of the new company, while Juhayna acquired 51%. The two companies target to achieve revenues that reach €100m by 2020, after entering in the domestic production stages of cheese products and baby formula.
Combined business results disclosed that Juhayna’s profits declined during the third quarter of 2016 by roughly 34% to register a net profit of EGP 58.2m, compared to EGP 88.2m in the third quarter of 2015.
The company’s combined profits during the first nine months of this year registered EGP 168.4m, compared to EGP 218.6m during the same period in 2015—a decline ratio of 22.9%.
Thabet stressed that the key and the main driver of the decline in his company’s profits during the current period was the high cost of the US dollar, especially with the increase of the US dollar price in the unofficial market. The company resorted to that market in order to obtain the biggest amount of foreign funds required for purchasing raw materials and dairy products from abroad.
He added that despite the remarkable improvement in sales—as a result of developing transportation and the distribution fleet—the negative effects of high production cost, due to the US dollar price increase, led to the decline in profits.
Juhayna injected investments worth EGP 344m to carry out expansions in its branches’ network, development of sales and distribution systems, adding new production capacities, and developing a dairy farm owned by the company—which started to provide a share of raw materials and production inputs on a daily basis.
Thabet noted that Juhayna has decided not to directly pass on the entire increase of production cost to the domestic consumer, which contributed to the decline profits.
Juhayna Group recently acquired 60% of the dairy market, 25% of the juices market, and 34% of the yogurt market. The group’s investments in Egypt since 2012 until the end of 2015 registered roughly EGP 2.5bn.
Founded in 1983, Juhayna’s current capital is valued roughly at EGP 941.4m. The share value at present is EGP 1. The company operates in the dairy, fruit, and juice production, processing, and packaging field.