CAIRO: Egypt’s Oriental Weavers posted a 4.4 percent drop in second-quarter net profit, as a rise in raw material costs offset strong revenue growth.
The world’s biggest machine-woven carpet maker said on Monday its net income fell to LE 58 million ($9.7 million) from 60.7 million in the same period of 2010.
However sales rose 16 percent to LE 1.1 billion, mainly due to a recovery in demand in the Egyptian market for rugs and carpets despite political tension after the overthrow of Egypt’s president in February.
"The second quarter of 2011 — typically our slowest period of the year — showed the strongest-ever top-line growth for a second quarter in Oriental Weavers’ history," said Chairman Mohamed Farid Khamis.
Sales to export markets increased by 12 percent year-on-year, outperforming an industry averaging 8 to 10 percent export growth. The firm said Asia was a strong performer while Europe, the United States and Canada began a recovery from a long slump.
However profitability was hurt as a 20 percent increase in costs of goods sold, stemming from rising prices of polyprpelene and oil-based raw materials.
"As we head into the second half … an anticipated easing in (costs) … should see pressures on margins easing," Khamis said.
Shares in Oriental Weavers closed up 1.7 percent before the results were announced, while Egypt’s broader index was down 0.6 percent.