The Edita Food Industries has decided to revise its capital expenditure )capex( budget for the fiscal year (FY) 2019/20, from an initial EGP 790m to EGP 650m.
The revision comes in line with a lower revenue outlook, and was undertaken to cover key projects it is investing in.
These include: two wafer lines; a biscuit line; the expansion of the company’s distribution fleet expansion to over 200 vehicles; and two production lines in Morocco. The company’s blended utilisation currently stands at about 60%.
Edita is going ahead with the construction of its Morocco factory, which will start operations at the beginning of 2021 with a cake and a wafer production line. As of the first quarter (Q1) of 2020, exports to Morocco were picking-up reaching about 14% of total exports.
At the beginning of 2020, Edita decided to increase its stock of raw materials to protect against the longer lead time in raw materials and finished goods imports, of between three and six days. The decision was brought into effect to protect against any production disruptions.
Edita has not witnessed any major changes in their working capital cycle on the back of the latest operating environment, since 97% of sales are still cash-based.
The company is optimistic in terms of the potential return of schools, universities and other on-the-ground activities by Q3 of 2020.
Edita invested heavily in optimising its portfolio and diversifying revenue streams with a series of new launches. This included the company’s entry into the biscuits segment, which added 6,000 tpa in May 2020, and the expansion of its bakery segment, using 5,500 tpa in Jan 2020. The company also introduced an EGP 5 per pack and EGP 4 per pack price Molto Magnum and Sandwich.
Besides the impact of the novel coronavirus (COVID-19) on sales, the company considers its new launches as successful. Some stock keeping units (SKUs) have, in fact, exceeded their initial budgets for the quarter, with Molto Magnum, upsized HoHos and Todo Max constituting about 14% of revenues for Q1 of 2020.
According to the latest market share data, Edita saw some market share gains in certain segments, including 3-4% increase in the cake and sweets segments. The company was also able to defend its market share in other segments.