        Reported net income: EGP1,037.8mn, -19% Y-o-Y, +5% Q-o-Q
        Revenue: EGP3,703.4mn, +2% Y-o-Y, +9% Q-o-Q
        Gross profit (incl. lease and depreciation): EGP1,421.7mn, -9% Y-o-Y, +10% Q-o-Q
 
Eastern Co. reported KPIs for 2Q18/19, with headline net income coming in at EGP1.04bn, down 19% Y-o-Y (+5% sequentially). Earnings were affected mostly by lower interest income (c11% of 2Q18/19 earnings vs. 20% in 2Q17/18), which fell 58% Y-o-Y to EGP109mn, as the company’s cash balance declined (-46% Y-o-Y to EGP4.8bn by end of 1Q18/19), due mainly to dividend payments. Net income declined 13% Y-o-Y in 1H18/19 to EGP2.03bn. Revenue inched up 2% Y-o-Y to EGP3.7bn (+9% Q-o-Q), slower than the growth seen in the prior 10 quarters as the effect of the last round of price increases began to dissipate. All EC brands prices were last raised in Nov 2017, accompanying a tax hike (Cleopatra Box +21%, Cleopatra Queen +6%, Cleopatra King +17%). Revenue grew c4% in 1H18/19 to EGP7.09bn. Headline gross profit (including depreciation and lease costs) declined 9% Y-o-Y to EGP1.42bn (+10% Q-o-Q), with gross margin continuing to weaken for the fourth consecutive quarter, narrowing c4.8pps Y-o-Y to 38.4%, likely on input cost pressure, but stabilised sequentially (+40bps). 

Nada Amin, Hatem Alaa, Mirna Maher

  
Eastern Company: EGP16.69 as of 30 Jan. 2019, MCap: USD2,132mn, EAST EY/EAST.CA