Lecico Egypt turns profitable, posts LE 586M revenues in Q2

CAIRO – 14 August 2017: Lecico Egypt’s posted net profit of LE 13.7 million in the second quarter of 2017 versus loss of LE 39.1 million ($2.2 million) in the same period last year, a Monday statement said.

Consolidated results revealed that operating earnings before interest and taxes (EBIT) reached LE 47.7 million ($ 2.68 million) in Q2 of 2017 against operating loss of LE 19.4 million in Q2 of 2016; revenues hiked 69 percent to LE 586 million in Q2 of 2017.

For the first six months of this year, revenue surged 70 percent to LE 1.13 billion. The company recorded operating EBIT of LE 1 billion in H1 of 2017 versus an operating loss of LE 45.9 million in H1 of 2016.

Net profit reached LE 32.3 million compared to a loss of LE 80.4 million in the same period of 2016.

“I am pleased to report another quarter of profitability. I believe the two quarters of profitability show a good step in our recovery; and the fact that this was not reflected in our share price led us to buy 10 percent of the company shares as treasury stock at the end of July. I think time will show it is an excellent investment,” Lecico Egypt Chairman Gilbert Gargour said.

Lecico Egypt announced earlier on its website that it has successfully acquired 10 percent of the company’s outstanding share or eight million shares. These shares were acquired on a prorate basis at an extraordinary price of LE 6 per share.

Moreover, Lecico Egypt CEO Taher Gargour pinpointed that the company has controlled its costs, especially that the reduced production seen in Ramadan increased unit costs for the second quarter, reflected negatively on the gross margins.

Net debt increased LE 140 million or 14 percent in the quarter as working capital grew quarter-on-quarter, the statement read.

“We continued to build stocks of finished goods despite using the Ramadan slowdown to reduce production. We were able to reduce Egyptian market receivables quarter-on-quarter but this was offset by growing export receivables,” Taher Gargour added.

The CEO highlighted that the company is working on offsetting the inflationary pressures caused by the government-led cost hikes announced in July, by increasing local price and setting better export prices.

“The floatation and related price increases in the local market have made a big difference to our financial health and we must build on this in the coming quarters,” CEO Gargour said.

In July, the Central Bank of Egypt (CBE) unexpectedly decided to raise interest rates by two percent. The Monetary Policy Committee (MPC) hiked the overnight deposit rate to 18.75 percent from 16.75 percent and the overnight lending rate to 19.75 from 17.75 percent.

The CBE’s decision followed its move in November floating the Egyptian pound, as part of the government’s broader efforts to reform the business and investment climate in Egypt to attract much-needed investments to the country.