CAIRO: Cairo Poultry Company is behaving strangely for a business in the midst of one of its industry s worst crises. As chicken retailers and even some producers have struggled to survive since the outbreak of avian flu in February, Cairo Poultry has increased its capital, paid out dividends and recently announced plans to build a new LE 100 million slaughterhouse in Noubaria.
The new facility will increase the company s output by 350 percent, from the current level of 80,000 chickens slaughtered per day to 280,000. The company expects the new facility to supply 10 percent of the country s poultry consumption.
The work for the establishment of the slaughterhouse is progressing in accordance with the plan to commence its operation and receive [the equipment] ready for use in January 2007, the company said in a letter to the stock exchange.
The facility will have a production capacity of 10,000 chickens per hour as well as a refrigerated storage capacity of 2,000 tons.
Cairo Poutry is one of the nation s leading producers of poultry. It breeds baby chicks to be raised for slaughter or to breed a second generation of chicks (with the first generation known as grandparents).
We are a completely integrated group; we operate from the grandparents until the slaughterhouse, Hazen Zayed, the Cairo Poultry s deputy general manager for finance and investment, tells The Daily Star Egypt.
The company was badly affected by the measures taken by the government to contain the spread of avian flu amongst livestock, namely the ban of the transport of live birds between governorates and the prohibition of the live sale of birds for manual slaughter .
The whole market was affected by [the prohibition of] the movement of the birds, says Zayed. We had problems moving the birds from the farms to the slaughterhouse and prices were hit very much during the first quarter.
The ban on manual slaughtering at small kiosks was particularly harmful to the industry because much of the nation s sales are done through such kiosks.
When the government stopped this [manual slaughtering] it reduced the sale of birds, says Zayed. This affected the sales [of Cairo Poultry] because [small kiosks] are one of the clients.
Meanwhile, broiler breeders that purchase day-old chicks from Cairo Poultry and raise the chicks to be sold and slaughtered have been forced out of business because of the slump in sales and the fall in prices.
We send our one day old chicks to other farmers who raise these chicks, and then they go to manual slaughtering, explains Zayed. So indirectly we were affected, because these small farmers … generated losses and they cannot take the losses.
Although the industry has been adversely affected by the government s actions to contain the avian flu virus, Zayed explains that such measures should have been implemented a long time ago.
The government s decisions concerning the small shops and transforming manual slaughtering is an international standard, says Zayed. It should have taken place a long time ago. Nobody in the world is working with manual slaughtering.
In the long-run, these measures are anticipated to raise the level of hygiene in the Egyptian poultry industry to international standards, and Zayed believes that his company will eventually benefit from this.
This explains the significant expansion of Cairo Poultry s slaughtering capacity, while the capital increase was necessary in light of the company s substantial losses during the first quarter of this year.
Cairo Poultry lost LE 14.2 million during the first three months of this year compared to a profit of LE 13.8 million during the same period last year. The capital increase of approximately LE 10 million was carried out in anticipation of this loss through a transfer from last year s profits.
An increase in capital is basically to maintain our suitable leverage, because we are projecting such losses [in the first quarter], says Zayed.
Zayed adds that the dividends of LE 0.10 per share were allocated based on last year s profits.
It’s the minimum dividends [that were] distributed; it s not much and [the shareholders] deserve the profits generated in 2005, says Zayed.
Cairo Poultry is owned mainly by Kuwait s Kharafi family and the company s shares are floated on the Cairo and Alexandria Stock Exchanges.