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Tuesday, 16 August 2022

Enough earnings for you?

Yesterday was an earnings extravaganza, ladies and gentlemen. Among those reporting were (in alphabetical order):

Contact Financial Holding’s net income dipped 4% y-o-y to EGP 104.4 mn in 2Q 2022 amid challenging economic conditions, according to the company’s financial statements (pdf).The company recorded solid growth in its financing and ins. segments. On a 1H basis, the company’s net income is up 18% to EGP 258 mn thanks to a strong first quarter.

Net financing income for 1H2022 was up 22%, driven by 52% y-o-y growth in total new financing extended, which came in at EGP 5.1 bn. Big growth drivers included the company’s consumer finance, working capital, commercial trucks, and mortgage products.Total gross premiums written at the company’s ins. division came in 98% ahead of the first six months of last year at EGP 504 mn.

Looking ahead: “While the challenges faced during the first half of 2022 are likely to persist in the second part of the year, we are confident that we have in place a strong strategy to navigate the tough operating environment, and as such our priorities for the year remain unchanged,” the company said in the accompanying earnings release (pdf).

AMENDMENT- This story was updated on 16 August, 2022 to reflect that higher inflation, the EGP devaluation, and higher credit losses were not the cause of an increase in operating expenses at Contact Financial during 2Q, as we had stated in a previous version of the story. 

Edita Food Industries’ net income more than doubled in 2Q 2022 to EGP 196 mn on the back of a round of price increases and bigger sales volumes, according to its earnings release (pdf). The company recorded a 37% increase in revenues to EGP 1.57 bn, with price increases in the range of 18% per pack easing pressure on the company’s profit margins, according to the release.

Driving growth: The company’s cake segment was the largest contributor to revenue growth, climbing 65% to EGP 477.9 mn and accounting for half of the company’s revenues during the quarter. The bakery segment, which accounted for 32% of revenues, saw a 15% increase, while revenues from the biscuits segment more than tripled.

Coping with inflation: WIth commodity prices skyrocketing and domestic inflation running high, Edita raised prices and reconfigured products twice in the reporting period, it said.

e-Finance doubles earnings y-o-y: e-Finance’s net income soared 104.8% y-o-y to EGP 279.3 mn in 2Q 2022, according to its earnings release (pdf). Revenues at the state-owned firm rose 59.3% during the quarter to record EGP 702.5 mn.

The breakdown: Growth was driven primarily by the company’s flagship business, e-Finance for Digital Operations, where revenues were up 42.9% to EGP 594.5 mn. E-commerce subsidiary eAswaaq also turned in a standout performance. The company’s card services business, eCards, saw a 39.7% decline in revenues to EGP 23.3 mn on the back of “foreign currency and worldwide sim card shortages which may extend into the coming quarters,” e-Finance said. Revenues were also down 17.6% to EGP 12. 5 mn at the firm’s digital payments arm eKhales.

What’s next: The company has gone to full rollout on its eTax and e-receipt systems and is now laying the groundwork to enter Libya, Tunisia and other African countries, Chairman Ibrahim Sarhan said.

First earnings with PIF on board: Sarhan noted that the earnings were the first with Saudi Arabia’s PIF on board as the company’s largest single shareholder.

Egypt Kuwait Holding (EKH) reported a second consecutive quarter of record earnings in 2Q 2022, the company said in its latest earnings release (pdf). Net income rose 60% y-o-y to USD 72.4 mn during the quarter, as the company continued to benefit from a tight global market for fertilizers and petrochemicals. Revenues also saw a significant boost, rising 53% y-o-y to USD 284.8 million.

EKH is still riding the commodities squeeze: The strong results were underpinned by growth in the firm’s fertilizers and petrochemicals segment, where revenues rose 86% y-o-y to USD 190.9 mn on higher urea prices at subsidiary AlexFert and higher sales volumes at subsidiary Sprea Misr.

E-payments giant Fawry’s net income eased 35% y-o-y in 2Q 2022 to EGP 24.15 mn, according to the company’s earnings release (pdf). This came despite revenues rising 35% y-o-y to register EGP 531.29 mn. The fintech giant’s bottom line was impacted by nonrecurring items, including a noncash expense of EGP 21.7 mn for its newly introduced employee stock ownership plan (ESOP). Setting aside those charges, net income would have dipped 14% y-on-y to EGP 41 mn.

What’s driving revenue growth: Banking services, which saw revenues at both its acceptance and agent banking segments double. The acceptance business “generated more than 20% of consolidated revenue growth for the six-month period,” the company said.

Big landmark: Fawry broke the EGP 1 bn mark for 1H 2022 revenues.

Looking ahead, it’s about growth and investment: The company says it is on track to introduce a range of new products this year, including its myFawry prepaid card, app-based financial solutions, and a full-fledged BNPL platform. Its earnings release name-checked its recent investments in Brimore and El Menus, the launch of Roaderz, and its partnership with Sudan’s Alsoug.

Housing and Development Bank’s (HDB) net income rose 48% y-o-y to EGP 564 mn in 2Q 2022, according to the bank’s earnings release (pdf). This came on the back of a 41% increase in the bank’s net interest income, which was driven by growth in its loan portfolio, treasury income and central bank deposits.

In detail: HDB’s gross loan book grew by 16% to EGP 31.3 bn during the first six months of the year as the bank focused on expanding its commercial banking operations. Deposits increased 25% to EGP 78.6 bn in the period, driven primarily by a 31% increase in corporate deposits.

What they said: “The bank’s positive results for the period reflect our modernized business model’s focus on continuously growing and generating revenue from core commercial banking activities across the retail, corporate, and SME fronts,” Chairman and Managing Director Hassan Ghanem said. “HDB’s corporate and retail loan portfolios have expanded significantly as more individual and corporate clients trust us with managing their business and day-to-day banking needs as well as leverage HDB’s attractive rates and wide range of services.”

CORRECTION- This story was updated on 16 August 2022 to correct a typo in the figure for HDB’s loan book, which was EGP 31.3 bn at the end of the reporting period, not EGP 31.3 mn.

Orascom Development Egypt’s (ODE) net income increased 28.9% y-o-y to record EGP 394.6 mn in 2Q 2022, according to its earnings release (pdf). Revenues were up 23.0% y-o-y to EGP 1.9 bn, up from EGP 1.5 bn in 1Q 2021. The company attributed the rise to accelerated construction at its developments and improved performance in its hotel and towen management sectors.

ODE saw strong real estate sales + a rebound in tourism: Net real estate sales in 2Q 2022 reached EGP 2.6 bn (up 39.4% y-o-y), closing the company’s best-ever first half for sales at a total EGP 4.7 bn. ODE hotel revenues jumped 132.1% y-o-y to EGP 372.6 million on the back of the continued recovery in tourism.

Oriental Weavers’ net income fell 29% y-o-y to EGP 211 mn, according to the company’s earnings release (pdf). The company’s revenues were up 14% y-o-y, reaching EGP 3.25 bn, on the back of price increases, an enhanced product mix and the impact of the EGP devaluation.

Export volumes cooled on demand worries: Softened demand led to a 14% y-o-y decrease in export volumes in 2Q 2022, as inflation hit discretionary spending abroad, though export revenues increased 8% y-o-y to EGP 2.1 bn due to the EGP devaluation and price increases. Revenue growth similarly outpaced volume growth in the local market, where revenues rose 27% to EGP 1.1 bn on just a 4% increase in sales volumes. Increased prices came to stop a 26% increase in raw materials costs for the company from eating further into margins.

Tenth of Ramadan for Pharma Industries and Diagnostic Reagents (Rameda) reported 65.8% y-o-y growth in net income to EGP 52.4 mn during 2Q 2022, according to a press release (pdf). The company’s topline for the quarter was up 38.0% y-o-y to EGP 368.4 mn, with the company attributing the growth to higher private sales and export volumes.

Private sales are driving revenue growth for Rameda: The company’s private sales volumes — meds sold to domestic distributors to stock local pharmacies — were up by roughly half in the first half of the year “on the back of solid growth of a number of Rameda’s top-selling products, coupled with the general post COVID-19 recovery in Egypt’s pharmaceutical retail segment,” according to the company’s earnings release (pdf). Private sales made up 70% of the company’s consolidated revenues and 75% of revenue growth in 1H 2022.

Rameda acquired two new molecules in 2Q 2022, good for four new products in the first half. The new additions were apixaban (an anticoagulant) and lacovimp (an anticonvulsant). CEO Amr Morsy said he is “confident that we can carry our strong momentum throughout the coming months to deliver consistent growth,” including through the growth of the company’s product portfolio.

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