Juhayna Food Industries’ third quarter (Q3) net profits recorded EGP 58.19m, a 34% decline compared to the same period in fiscal year (FY) 2015/16 when profits registered EGP 88.23m. This comes despite a 10.9% increase in sales to record EGP 1.259bn, compared to EGP 1.135bn in the same period the previous fiscal year.
Chairperson of the Board of Directors and CEO Safwan Thabet told Reuters on Thursday that the downfall in profits is a result of dollar shortages, and Juhayna’s decision not to burden its customers with price increases stemming from higher import costs.
“Sales increased in light of unusual conditions, and this is good. But the increase in cost was not fully passed on to the consumer. We are increasing prices only slightly in order to maintain our customer base,” Thabet sai.
Egypt has been suffering from a crisis as foreign currency reserves have fallen dramatically. As a result of the political instability post-25 January Revolution, as well as the 30 June Uprising, there has been a sharp decline in tourism, which is Egypt’s main source of foreign currency, as well as foreign direct investments (FDI).
As a result the dollar prices rose in the parallel market reaching EGP 15 in October, while the official price is still stable at 8.88. The huge gap between the official and parallel markets has only added on to the huge cost for importers currently.
Thabet added that the company is planning to reduce its raw material imports, in order to lower its imported raw material to 50% of the total used in production next year, compared to 60% currently.
Juhayna, established in 1983, is Egypt’s largest producer of juice and dairy products with at least seven factories producing more than 200 products.