CAIRO: Ceramics maker Lecico Egypt’s consolidated net profit for fiscal year 2010 fell 14 percent to LE 94.8 million, according to a statement.
The sanitary ware producer is expecting a challenging year ahead given the current situation in Egypt and Libya, which it plans to meet by improving pricing and cost control
Revenue for the year was down 3 percent to LE 1.02 billion, of which sanitary ware comprised 56 percent.
Sanitary ware revenue fell 8 percent from the previous year to reach LE 571.4 million on the back of an 11 percent decrease in volumes to 5 million pieces, with 58.4 percent going to exports.
Meanwhile, tile revenue increased 3 percent to LE 444.9 million, with 22 percent being exported.
The fourth quarter of 2010 saw net profit slide 60 percent to LE 11.4 million.
Revenue for the quarter fell 10 percent, reaching LE 239.9 million, with 54 percent from sanitary ware, the firm said.
Sanitary ware revenue dropped 20 percent to LE 129.5 million, as 63.2 percent went to exports with volumes of 1.1 million pieces. Tile revenue rose 3 percent to LE 108.9 million, 19.2 percent for exports.
In the statement, Lecico Egypt’s Chairman and CEO Gilbert Gargour said, "2010 has been a difficult year with the negative effects of weaker demand in our European markets in the UK and France. This was compounded by loss of our export warehouse and several months of export stocks at the peak of our summer season.”
A “difficult” fourth quarter saw weakened demand in Lecico’s two main European markets, which Gargour attributed to “fear of contagion within the Euro zone as a result of the Greek and Irish crisis.”
Locally, the market was also affected by restriction on “quantities delivered to wholesalers in order to encourage better price discipline in the market place. This led to a significant drop in sanitary ware sales for the quarter.”
The firm however said it still saw margin growth for the year as a whole, and “would have reported growth in the fourth quarter if not for one-off additional provisions and finance charges.”
As for the this year, which is already proving to be a challenge for the economy as political change causes tremors in the local market, Gargour said, "2011 is a momentous year.”
“The will for change expressed in Egypt and in the rest of the Middle East is a welcome and salutary call. Change will however likely bring with it periods of instability and confusion.”
Lecico’s labor force has demanded better wages, to which the company has complied with wage and benefit adjustments. Meanwhile, however, “foreign clients are nervous,” he said, making it difficult to “expect improvement in the early part of the year ahead.”
Elie Baroudi, Lecico Egypt’s managing director, said the company will focus on “developing new customers and markets to offset anticipated weakness in domestic and regional markets; improving pricing; and continued focus on cost control.”
Lecico reportedly has new markets in Europe where operations will begin in the first half of 2011.
"Lecico will also be looking to improved pricing and cost control to counter expected inflationary pressure and partially offset the impact of any sales volume weakness,” he said, anticipating inflationary pressures in 2011 coming from global food prices, higher domestic wages and the need to finance a growing deficit in Egypt.