The company plans to boost exports to EGP 500m: managing director of Hero

Selim Hassan
5 Min Read

Hero Food Industries plans to double the size of its exports in 2017 to reach EGP 500m, up from EGP 250m last year.

Managing director of the company, Mahmoud Bazan, said that it aims to reach sales of EGP 1bn, equally split between exports and the domestic market.

He estimated the size of the company’s exports last year to be around EGP 250m, accounting for 34% of the total sales worth EGP 720m.

He noted that the decision to float the Egyptian pound depreciated the value of the currency by 50%, which gave Hero an opportunity to boost its exports.

He pointed out that the depreciation of the local currency’s value contributes to increasing the competitiveness of Egyptian products in external markets.

The Central Bank of Egypt (CBE) had issued a decision in November 2016 to float the pound, which brought down the currency’s value from EGP 8.88 to EGP 18 against the US dollar.

Bazan said that the company exports to 30 markets worldwide, with plans to enter 10 new ones in 2017.

He pointed out that Arab countries account for the largest share (70%) of the company’s total exports. Of those, Saudi Arabia, the United Arab Emirates (UAE), Kuwait, Jordan, Tunisia, and Algeria had been the largest importers of the company’s products.

Moreover, Japan acquires 10% of the exports, while the remaining size amount goes to South and North America.

He said that African countries—most prominently Sudan, Kenya, Ethiopia, and Nigeria—obtain a relatively small share of the company’s export volume.

He added that the company plans to increase its production capacity this year by 5,000 tonnes to reach 40,000 tonnes.

He pointed out that Hero invested $5m to develop its plant, adding that new investments contribute to raising capacity.

Bazan said that the company had restructured the plant entirely and upgraded the machinery to improve the quality of final products, save energy, and protect the environment.

He stated that the company also aims to register growth rates of 10% per year over the coming five years.

He added that the company faced major challenges in 2016 as a result of hikes in production input prices, especially sugar by 60%, which forced the company to raise its prices by 30-43%.

Hero had lifted the price of jam by 30% and that of baby food between 17 and 43%.

Bazan said that the consumer purchasing power declined in the past period as goods prices surged.

He added that Hero adopted a new policy to counter the decline in purchasing power through producing new 245 gm packages that were introduced to the market in January.

He added that the company owns the largest factory for the production of jam in the Middle East and Africa region, with exports to 30 countries. Hero also accounts for 55% of the jam market in Egypt.

Bazan stressed that the company does not intend to make any acquisitions in the coming period. He also refuted the rumours about listing the company’s shares on the Egyptian Exchange.

Hero had acquired 65% of Vitrac’s shares in 2002, and in 2005 it acquired the remaining shares before it changed the name to Hero.

Bazan said that the Swiss Hero achieved sales of CHF 1.2bn in 2016, noting that Egypt represents 4% of total worldwide sales.

He added that the company does not repatriate profits abroad, but reinvests them in the local market.

He pointed out that Hero considers Egypt to be the hub for exports to the Arab world, in addition to being an important market with over 90 million potential customers.

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