EGYPT – Qatari dairy and juices group, Baladna, has made another tranche of investment in Egyptian peer, Juhayna Food Industries, in the form of shares purchase amounting to E£7.4m (US$239,000).
In a stock-exchange filing, Baladna said the reason for additional share purchases in the company was that it wanted to grow within Qatar and overseas.
“Investment decisions are based on very detailed analysis of the market. Egypt’s market, with a population [of] more than 100 million, is a large and promising food and beverage market,” the filing read.
In just under two years, Baladna has increased its shareholding in Juhayna from 10% to more than 15%, through an acquisition of some 600,000 shares.
In the first quarter of 2023, Juhayna posted a 42% jump in revenue to E£3.4bn. Its net profit more than doubled to E£339m.
For 2022, the group generated revenue of E£11.36bn, up 29% from a year earlier with its net profit standing at E£638m, 21% higher year on year.
Meanwhile, Baladna, based north of Doha, has three factories making dairy products, juices, and packaging.
Th Qatari agricultural company raises livestock and produces dairy products and is the gulf nation’s largest locally-owned food and dairy producer, supplying over 95% of the country’s fresh dairy products.
In the first three months of 2023, Baladna saw its revenue rise 6.3% to QR254.4m. Its net profit of QR20m was however down more than 20% when compared to the corresponding period a year earlier.
During the quarter, Baladna announced a deal to make The Laughing Cow cheese in Qatar for brand owner Groupe Bel.
Egyptian Food producers Upbeat about 2023
Its further foray into the Egyptian industry comes at a time when food producers in the country expect positive performance during the current year, despite high inflation and interest rates.
Marina William, a financial analyst at Al Ahly Pharos for Securities Brokerage, said that the food sector companies benefited greatly from inflation and their profits increased last year, starting from the second quarter of 2022 until now, especially since the companies quickly absorbed the rise in raw materials, and put in place new policies to maintain corporate profit margins.
She explained that the companies passed the increase in raw materials to consumers to avoid affecting their profit margins, in addition to offering new products at different prices.
William told Daily News Egypt that the rise in interest rates affected the expansions of food companies considering the high cost of borrowing for companies that want to expand, especially those companies that rely on bank financing in the expansion process.
She added that some companies have benefited from the increase in exports, especially those working in dairy products and juices, with an increase in export demand for these commodities, and the increase in exports varies between companies listed in the food sector.