        Reported net income: EGP991.2mn, -5% Y-o-Y, +24% Q-o-Q
        Revenue: EGP3,392.5mn, +7% Y-o-Y, +0% Q-o-Q
        Gross profit (ex-lease): EGP1411mn, +5% Y-o-Y, +16% Q-o-Q
        EBITDA: EGP1268.7mn, +4% Y-o-Y, +22% Q-o-Q
 
Eastern Co. released its 1Q18/19 results details (posted KPIs on 23 October), with headline earnings of EGP991mn, down 5% Y-o-Y (+24% Q-o-Q); excluding FX losses (EGP4mn in 1Q18/19 vs. EGP35mn in 1Q17/18) and small capital gain (EGP2mn), recurring earnings declined 7% Y-o-Y to EGP987mn, mainly on margin pressure and lower interest income (-45% Y-o-Y to EGP129mn, in line with the 45% decline in the company’s cash balance to EGP4.78bn post the payment of a one-off dividend earlier in the year). Revenue was up 7% Y-o-Y (flat sequentially) to cEGP3,392mn as revenue from local brands (84% of 1Q18/19 total revenue) rose 8% Y-o-Y on price increases. The company increased ex-factory prices for Cleopatra Queen (c38% of volumes) and Cleopatra King (c28%) c8% and c23%, respectively, in Jul 2017. All brands saw another round of price increases in Nov 2017 (following a tax hike): Box (+21%), Queen (+6%) and King (+17%). Meanwhile, the company’s USD-denominated toll manufacturing revenue was flat Y-o-Y at EGP548.5mn. Gross margin (ex. lease expense and depreciation) contracted c60bps to 41.6%, with gross profit up only 5% Y-o-Y (+16% sequentially) as direct labour costs (c20% of COGS) rose 7% Y-o-Y and raw material costs (c80%) increased 8%. The company’s raw tobacco inventory holding stood at 12 months (vs. 11 in 1Q17/18). EBITDA margin narrowed a stronger c1.0pp Y-o-Y to 37.4% on a 19% Y-o-Y increase in SG&A costs, with EBITDA growing 4% Y-o-Y to EGP1,269mn (+22% Q-o-Q).

Eastern Company: EGP17.80 as of 15 Nov. 2018, MCap: USD2,242mn, EAST EY/EAST.CA