Food company revenues soar as bellies rumble
Imagine a household that spends around 3,000 Egyptian pounds per week on groceries. If the prices of the food items they usually buy increase by 40%, they would need to spend 4,200 pounds weekly just to maintain the same level of consumption. This isn’t just a theoretical calculation. Data from publicly listed food companies on the Egyptian Exchange show that in 2024, their product prices rose by nearly this rate.
Although the exchange rate of the US dollar has remained stable since March 2024, its ongoing level around 50 pounds has significantly increased the cost of imported raw materials for food companies. These companies responded with price hikes that outpaced the general inflation rate reported by Egypt’s official statistics agency CAPMAS, according to Al Manassa’s analysis of the financial results of three food companies.
The upside, according to sector analysts, is that price hikes are expected to slow this year. That outlook coincides with anticipated declines in inflation in 2025 and exchange rate stability.
What last year’s results reveal
A few weeks ago, food companies listed on the Egyptian Exchange began reporting their 2024 financials.(*) The reports show strong revenue growth, driven by food price increases that exceeded in some cases the overall inflation rate.
According to Menna Shams El-Din, chief investment officer at Edita Food Industries, the company raised its product prices by up to 38% last year. She described this as a significant adjustment but a necessary one. “The price hikes were crucial due to the devaluation of the pound in March 2024 and the dollar surpassing the 50-pound mark. It was about maintaining profitability over the long term,” she said.
Juhayna also increased its prices by up to 30% across all products, compensating for the imported production inputs that account for about 30% of total costs, said Salma Abdelhay, food and beverage sector analyst at Al Ahly Pharos Investment Bank.
Abdelhay added that Obour Land raised prices by an average of 40% across its product lines. The company imports 45-50% of its production inputs, which include powdered milk, hydrogenated oils, and packaging materials.
Although food prices are a major driver of official inflation rates, the average 40% price hikes at these three companies significantly exceeded 2024’s headline rate of 28.1%.
This data reveals how food companies have been able to offset rising production costs by simply increasing prices. These firms produce staples that consumers can’t easily cut back on, even during inflation. According to Salma Abdelhay, this pricing power is particularly strong among companies with significant market share, such as Juhayna, a dominant player in Egypt’s dairy and juice sectors.
Interest rate pressure
Beside import costs, central bank policy has added to corporate pressure, according to Ahmed Gamal, a financial analyst at MubasherTrade. In March 2024, the Central Bank of Egypt raised interests by 6% in a single move to curb the inflationary effects of the pound’s devaluation. Rates have remained high since then but fell back this month.
Company financial statements show a sharp increase in financing costs. Obour Land’s financing expenses reached 371.6 M pounds in 2024, up from 149.4 M in 2023. Juhayna’s rose to 596.4 M from 320.8 M, and Edita’s grew to 402.3 M from 211.8 M.
Have higher prices affected consumption?
That doesn’t mean consumers haven’t responded. Edita’s sales volume declined by a modest 3.8%, according to a Naeem Brokerage report reviewed by Al Manassa.
In its own analysis, Edita noted that higher prices offset the drop in volume. For example, in Q4 2024, “the baked goods segment grew 14.5% year-on-year to reach 4.7 billion pounds in sales, driven by a 42.9% increase in average unit price, despite a 19.9% drop in sales volume.”
While Juhayna and Obour Land did not disclose unit sales figures, their results showed strong revenue growth. Whether they, like Edita, compensated for lower volumes with higher prices, or simply maintained sales levels, is uncertain.
Export growth as a strategic response
In general, financial analyst Ahmed Gamal believes food companies did not suffer significant volume declines in 2024, despite steep price increases. “Sales drops were very limited. No more than 3%,” he said.
Gamal also noted that these companies ramped up exports to ease the pressure from domestic market challenges, including the March 2024 devaluation. “These firms import a large share of their raw materials, so they’ve turned to exports to boost revenue,” he said.
Juhayna’s exports surged 205% last year and contributed 15% of total revenue, added Gamal. Edita’s exports rose 42%, particularly due to expansion in Morocco, and now account for 10% of its revenue. Obour Land is also working to raise the revenue share from exports to 15% in 2025.
Will food prices continue to rise in 2025?
Inflation dropped significantly in early 2025, and the central bank lowered interest rates by 2.25%. So, can we expect food price rises to ease this year?
Salma Abdelhay of Al Ahly Pharos expects declining inflation this year will moderate the pace of price hikes in the food sector. Still, she expects prices to rise by 20 to 25%, which remains high by historical standards.
She added that inflation is stabilizing at more moderate levels, which could help improve consumer purchasing power compared to 2024.
Gamal agreed, noting that pressure on food companies is easing. One reason is the anticipated interest rate cuts. “If the central bank follows through with a 6% rate cut this year, that would be a positive sign for companies,” he said.
However, other factors could still push prices higher, including the government’s expected move to fully liberalize fuel prices in 2025. Analysts previously informed Al Manassa this could raise fuel costs by about 30% this year.
Gamal also pointed out that although the dollar is more stable than over the last two years, the exchange rate remains volatile, surpassing 51 pounds recently amid the global trade war. “It’s difficult to forecast inflation precisely this year,” he said, citing fuel price hikes, the trade war, and regional geopolitical tensions as key variables.
(*) The financial results referenced in this report could be viewed here: Juhayna, Edita, Obour Land