Egyptian sugar processor Delta Sugar reports 15.4% revenue rise in Q3

EGYPT – Delta Sugar, a public listed company on Egyptian Exchange (EGX) has reported that it has earned EGP 543.3m (US$34.59m) in revenue in third quarter, reflecting a downturn of 41.5% quarter-on-quarter (q-o-q), but a rise of 15.4% year-on-year (y-o-y).

The company’s gross margin plummeted to -17.0% versus 23.3% and 2.6% in Q2 of 2020 and Q3 of 2019, respectively.

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It also recorded a net loss of EGP 114.4m (US$7.2m) during the quarter, compared to a profit of EGP 170.9m (US$10.8m) during Q2 of 2020, and losses of EGP 57.5m (US$3.6m) in Q3 of 2019.

Delta Sugar said that the net loss was due in part to the conditions in the local and global sugar markets, mainly because of the drop in local sugar prices, which reached their lowest levels since the second half (H2) of 2019.

The market has also been affected by the weak demand for sugar in the local market, in addition to excess supply.

This has, in turn, forced the company to sell its products at levels lower than the cost of production by around EGP 1,400/tonne.

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Deta Sugar recorded a net loss of EGP 114.4m (US$7.2m) during the quarter, compared to a profit of EGP 170.9m (US$10.8m) during Q2 of 2020, and losses of EGP 57.5m (US$3.6m) in Q3 of 2019.

Delta Sugar is engaged in the manufacture of white sugar and related products, producing over 270,000 tons of white sugar annually.

It also produces beet pulp and beet molasses, which are used as basic ingredients for animal feed, and are distributed domestically and exported abroad.

The Company offers its products to a range of food processing industries, such as fruit juice, soft drinks, confectionery and marmalade.

Recently the Egyptian government put forward amendments to the value-added tax (VAT) law that includes raising its rate on snacks and flour-based sweets to 14%, from the current 5%.

The suggested amendments are still subject to the House of Representatives’ approval.

Naeem Research sees that the amendments, if approved, would affect snacks and sweet manufacturers badly, while they have already been negatively impacted by the novel coronavirus (COVID-19) pandemic.

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