Juhayna Will Continue to Face Pressure in 2014: CEO

Juhayna’s  (JUFO) CEO Safwan Thabet said, during the company’s analyst day, that Juhayna will continue to face pressure in 2014, especially in 1H2014 on rising raw material prices and weakened yogurt demand according to Beltone Financial research unit.

Thabet expects slight improvement starting 3Q, especially during Ramadan where demand peaks.

In 2013, the company had many challenges due to the rising raw material prices, EGP depreciation, and the political instability in Egypt and its export markets (i.e. Libya and Syria).

Due to the company’s investment in logistics, packaged milk currently constitutes c.35% of the milk market, versus 29% in 2012, and 23% in 2011 according to Thabet.

According to Beltone Financial research unit, Management said it is not looking to acquire any companies nor enter into any new export markets for the time being.

Juhayna’s new yogurt plant, which will have a capacity of 700 tons per day compared to 300 tons per day for the old plant, is expected to commence operations during Ramadan, the peak season for yogurt consumption in the market.

Thabet said new product varieties will be offered in 2014, especially after the inauguration of the new Egyfood yogurt plant.

Regarding raw material, Thabet ensured that Juhayna has enough raw material inventory to fulfill the company’s needs until end of August 2014.

Thabet stated that Juhayna does not have fixed interval dates for buying raw materials, but rather management uses its expertise and knowledge of the markets to time its purchases given all the variables.

He said that securing powder milk usually takes place during 4Q/1Q of every year.

Management expects raw material prices to go down in line with the global slowdown in commodity prices.

Source: Arab Finance