In case of any further query or request for information, please contact:
Karem Mahmoud,
Director of Legal, Compliance and Risk
investor@pepsidrc.ae
Tel: 04-8025000
Fax: 04-8025090
Asma Al Naqbi
Board Secretary
Asma.AlNaqbi@pepsidrc.ae
CHAIRMAN’S REPORT
Dear Shareholders,
It is once again our pleasure to share with you the business highlights of Dubai Refreshment PJSC (DRC) for the year 2022.
The year 2022 was mostly defined by continued strong recovery from Covid-19 impact of 2020, and the success of Expo 2022 in bringing people to Dubai and jump-starting UAE tourism recovery. DRC business benefited significantly from the strong recovery in tourism, which was reflected in strong volumes in the airlines and hotels channels. These channels continued to perform strongly for the full year aided by Expo 2022 business as well as Qatar 2022 world cup traffic. Other channels also performed well albeit at lower growth rates than airlines and hotels. The strong volumes coupled with selective pricing action helped offset significant cost increases that impacted DRC business in 2022 and helped the company grow profit against very significant challenges at the beginning of 2022.
Our strategy of continuing to protect market share in the core business while continuing to expand globally recognized brands is bearing fruit. Gatorade, Lipton Iced Tea and Teisseire continue to grow at fast pace, while the launch of Aquafina in Aluminum cans during Expo significantly helped the brand and scored an important public relations victory at a time when the UAE government is focusing on sustainability initiatives. Our core CSD business continues to perform well with the launch and expansion of no sugar Pepsi Black and a very successful football advertising campaign featuring several football stars including the Great Lionel Messi.
Revenues
DRC achieved total net revenues of AED 752 million versus AED 670 million in 2021 which represents an increase of 12%. Most of this growth has come due to strong recoveries in travel, restaurant and hotel sectors further supported by strong performance in new products such as Aquafina cans, Gatorade, Lipton and Teisseire.
Profitability
Total net profit for 2022 grew 9% to reach AED 105.6 million or 14% of net revenues versus AED 96.8 million or 14.4% of net revenues in 2021. EBITDA margin remained strong at 22% of net revenues in 2022 versus 24% in 2021. Profitability was helped by higher-than-expected revenue growth coupled with continued control over discretionary cost items. As witnessed worldwide, inflation has taken its toll on the cost base in line with global increases in commodities and transportation prices. The Company has already initiated several steps to recover some of these cost increases through effective cost savings, favorable raw material hedging and some necessary increases in consumer and export pricing. We will continue to monitor this situation and we will continue to initiate actions as necessary to deal with this rising risk.
Cash Flow
In 2022, DRC generated AED 215.9 million from operations, and paid AED 63 million in dividends to shareholders. DRC held AED 254.33 million in cash and cash equivalents at the end of 2022 and has no outstanding loans.
Future Growth
In last year’s report I mentioned that we are looking for growth opportunities, and we are constantly engaging with our partners to identify and take advantage of such opportunities. I am happy to say that we are already seeing some of the fruit of these efforts with the launch of several products initiatives as discussed above. The efforts in this area continue unabated and we are hopeful that additional initiatives that will help grow DRC business will be announced soon. We believe we have put in place the infrastructure and the organization foundation upon which we can continue to strongly develop our business and our efforts in this regard will continue to bear fruit over the coming years.
On behalf of the Board of Directors, I would like to express my gratitude and appreciation to the leaders of the UAE, His Highness Sheikh Mohamed Bin Zayed Al Nahyan, President of the UAE and Sheikh Mohammed Bin Rashid Al Maktoum, Vice President, Prime Minister of the UAE and ruler of Dubai and their brothers, members of Federal Supreme Council for providing us with the business environment and the policies that are necessary to build strong and prosperous nation where we can all thrive.
In addition, I would like to thank all the people who continue to provide their support and demonstrate their commitment and dedication towards achieving our objectives. Our employees, shareholders, customers, suppliers, and business partners are all equally important to us in our efforts to seek a better future for all.
Thank you.
On behalf of the Board of Directors,
Mr. Ahmad Bin Eisa Alserkal
Chairman of Board of Director