You may remember that around a month ago we have highlighted the fact that Tunisia has, in recent years, become a regional leader and a true reference in the Middle East and North Africa (MENA). This position was earned thanks to the country’s progressive reform efforts and the high economic growth which resulted of it as a result of it.
Only a few weeks ago, Newsweek ranked Tunisia as the best country in Africa, while a recent World Bank report called “Investing Across Borders 2010″ said that Tunisia stands out among countries in the Middle East and the Maghreb for its looser restrictions on foreign investment, it also added that Tunisia was encouraging foreign investment by simplifying the procedures to put capital to work in its economy. It goes on, The World Economic Forum, according to its Global Competitiveness Report for 2010-2011, covering a total 139 countries that Tunisia ranks as the 32nd most competitive country in the world, even ahead of countries such as Oman, Kuwait and Bahrain.
If you take a closer look into this dynamic little nation, you will find a set of compellingly competitive companies that have succeeded to grow beyond Tunisia and are making money across North Africa, Sub-Saharan Africa and Europe. One of these companies is Poulina Groupe Holding, the company on which we will shed some light this week.
Created in 1967, Poulina Groupe Holding (PGH) has achieved to become one of the main economic players in Tunisia. It came a long way since its initial days as a small chicken breeding unit, today the group controls more than 70 different companies operating in various sectors. The group has expanded its success story beyond Tunisian borders to markets such as Algeria, Libya, Morocco, sub-Saharan Africa, China and Europe.
Today, PGH is an integrated industrial group with activities structured around six major areas: poultry farming, industry, agribusiness & services, ceramics, packaging, and real estate. PGH is leader in most of the sectors in which it operates, and the largest listed industrial group in Tunisia in terms of market capitalization, sales and cash flow.
Focusing on leadership-positioning and value creation in each of its business lines, the group has been an active contributor to the sustainable development of Tunisia and the Maghreb region. Over the past 40 years, the group has been establishing strategic alliances with some of the most prestigious international names in its activities, a recognition of PGH’s know-how and experience.
In 2009, in the midst of the financial Crisis, PGH was able to post a mild performance in terms of sales growth in 2009, with a +1.5% increase in revenues y-o-y at 500 million Euros, following a difficult beginning of the year, and despite a decrease of exports to Europe, domestic sales remained steady.
Revenues partly benefited from a drop in raw materials and commodity prices worldwide (corn, soya, steel etc.) and when combined with an effective cost management, they were able to drive EBITDA to a double digit growth of 26.5% y-o-y at 85 million Euros. It also led to an improved EBITDA margin of 17.1% vs. 13.7% in 2008. Consolidated net earnings recorded a 8.2% y-o-y growth at 39.2 million Euros, leading to a slightly improved net margin of 7.8%.
During the first half of 2010, there was a strong rebound in activity throughout PGH’s core businesses, in itself valuable evidence that there was a pulse in the economy throughout Northern Africa.
Revenue from its poultry business increased 20% thanks to a pick-up in “feed” and “slaughter” activity. “Farming” also performed well, benefitting from a volume and price effect. PGH’s public works activity started operations in late 2008 in Libya; it began generating revenue in S2 2009 resulting in a sharp increase in income from this business in the first half of 2010. Steel transformation saw an increase of 21% in revenue thanks in part to an increase in the price of steel. PGH’s packaging unit’s income was up 29%. This performance is all on the back of higher sales activity in both domestic and export markets. This business has benefited from strong demand by companies using flexible packaging, as well as the increase in sales for its undulated cardboards. The 27% increase in revenue for its trade and services unit is due to two factors, the appreciation in raw material prices compared to 2009, and a significant increase in export sales.
The overall Group turnover for H1 2010 has increased by 24.4% to 290 million Euros. Similarly, Consolidated EBIT and Consolidated net income have evolved by 46.9% and 61.7% respectively
For more than 40 years, PGH Group has followed a meticulously planned strategic approach to expand and to diversify its activities. Today, it has reached the critical mass that allows it to compete on a regional basis. The founders of the group see the Maghreb region as the natural development area. PGH has been over the past few years investing in Algeria, Libya and Morocco where it has been effectively duplicating its local success story in six core businesses.
Other core elements of its development process include the identification of strategic partners as well as the planning of the necessary resources to implement projects in areas where PGH’s experience can make a difference, PGH plans to invest a total of about U$ 451mn, over the next few years.
This is a group to follow, it could well be one of the great corporate giants of the next decade. And this is just another story of another company that knows how capitalize on a market that is growing at above average rates, the kind of markets we can find in Africa.
With kind regards from the Silk Invest Team
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