Government maintains NCC not for sale
CAIRO: The National Cement Company (NCC) released partial H2, 2006 results Wednesday showing net income reached LE 151.2 million.
The figure represents a 36 percent increase over the LE 111 million in net income recorded in H2, 2005, after deducting LE 97 million in extraordinary revenues. The 95 percent government-owned NCC reported LE 204 million in net income in H2, 2005 after selling its stakes in other public companies as part of the Ministry of Investment s restructuring program for the company.
But NCC s numbers pale in comparison to others in the sector either reporting or due to report profit increases well above the 50 percent mark, such as Misr Beni Sueif at more than 80 percent and Misr Cement Qena (MCQ) at 90 percent.
Tarek Shahin, Beltone Financial cement sector analyst, says the government price cap implemented the second half of the year affected company earnings across the board but probably NCC the most.
NCC was the company that most abided by the government s price cap [in 2006], Shahin told The Daily Star Egypt. He added the government is unlikely to privatize the company in the near future, despite rumors, because it is needed for the government to exert some control over local cement prices.
Despite the announcement of two offers last week by Cimpor Inversiones SA and Arab Swiss Engineering Company to buy 100 percent of MCQ, the government has announced it does not intend to sell public company stakes in cement producers at the current time.
Cement ex-factory prices reached as much as LE 390 per ton before the Ministry of Trade and Industry intervened to set a price cap of LE 290. Most companies continued to violate the cap, and prices now hover around the LE 350 mark. NCC continues to sell at LE 320 according to the company s latest report.
Minister of Investment Mahmoud Moheiddin denied on several occasions in 2006 the restructuring of NCC was intended to prepare the company for privatization, but Chemical Industries Holding Company officials have reported otherwise. CIHC owns NCC and is a direct affiliate of MOI. In 2006, NCC s production capacity stood at 3.2 million tons, capturing 9 percent market share and ranking the company the largest government-owned producer.