Domty gets the cream as profits surge 355%

19-Apr-2016 - Last updated on 20-Apr-2016 at 12:32 GMT

Egyptian dairy producer Domty is celebrating a 355% year-on-year rise in annual profits, netting US$14.5m, just days after its highly-oversubscribed launch on the Egyptian stock market.

The firm recorded revenues of US$157.8m for 2015, up 24% from the year before, and a net profit margin of 9.2%. The results came at the end of March, 10 days after Domty’s listing, which itself was oversubscribed by more than 10 times in Egypt, and five times internationally, and saw the firm’s shares rise more than 9% in initial trading.

First public results

“It is an honour to report our first set of results as a publicly traded company following our very successful IPO... Domty delivered significant improvements across all of its key indicators in FY2015, with top-line growth and margin enhancements trickling down to our bottom-line, which rose nearly five-fold during the year to [US$14.5m],” said Omar El Damaty, chairman and managing director of Domty.

“The year just ended also saw us expand our production capacities with the addition of four new production lines in the carton pack cheese segment, positioning ourselves to capture future growth in this important market and cementing our position as Egypt’s leading cheese manufacturer and a top-five producer of juices,” he added.

Carton pack cheese was a major driver in Domty’s growth, with production expanding 40% year-on-year to more than 147,000 tonnes, and revenue up 26% to US$103.5m, or 66% of the firm’s total revenue. Other cheese segments were static in terms of production, but spreadable cheese and mozzarella saw revenue growth, up 48% and 12%, respectively.

In juice, Domty grew its 250ml segment production by 36.8% to 48,000 tonnes, while the firm’s 1-litre segment remained static. The 250ml growth was enough to boost the firm’s juice revenues by 42%, reaching US$25.9m for the year.

Cheap milk drives profits

The firm attributed much of the rise in profits to lower commodity prices, with powdered milk in particular falling 34% from the year before. And while Domty, along with other Egyptian producers, faced issues with the falling value of the Egyptian pound against the US dollar, this was more than offset by the falling cost of ingredients.

Domty’s board of directors recommended no dividend be paid for 2015, and El Damaty said the company was focused on growing its operations: “As we said at the time of our listing, we are very aware that our transformation into a publicly traded company has just begun. We will continue to enhance not only our operations but also our governance framework as we prepare to deploy the proceeds of a [US$33.8m] capital injection subsequent to our IPO.

“We are exploring opportunities to allocate the proceeds from the capital increase to expand our national distribution network, to introduce new product categories, and to expand our operations to high-growth African markets,” he added.