Vicat aims to achieve profit early next year

Shaimaa Al-Aees
7 Min Read

Vicat Egypt, a subsidiary of France’s Vicat Group, a French cement manufacturing company, as well as aggregates, and ready-mix concrete in four continents, targets producing 9 tonnes of cement per day early next year, after operating the second line of the company, Tamer Magdy, managing director of Vicat Egypt, told Daily News Egypt.

Magdy added that the current total production of the company is 1,500 tonnes per year at a rate of 4.5 tonnes per day in light of the current situation of the cement market, which is suffering from oversupply and high costs for industry manufacturers.

Vicat acquired Sinai Cement, located near Al-Arish City, in 2003. Sinai Cement is a public company, listed on Egyptian Exchange since July 2000. It operates within the materials sector focusing on construction materials. Sinai Cement is based in Cairo, Egypt, and was established in January 1997.

During the company’s sohour (pre-dawn meal) on Wednesday, Magdy revealed that the company’s market share does not exceed 3% in light of sebvere market competition. In addition, the company has been operating with only one production line since last year. Moreover, it stopped production during the first three months of 2018, but it is presently looking to raise its market share to about 5% by contracting road paving projects.

Vicat targets to achieve profit early next year, and the company’s loses will decrease, and it aims to operate the second production line late this year, he commented.

He disclosed that Vicat’s investments in Egypt amounted to approximately €200m, and that the company plans to invest about €30m in the coming period to develop new alternative energy for cement production, improve production efficiency, and optimise cost.

“The company expects to witness a significant improvement in its performance, especially in light of the improvement of the security situation in Sinai, after the great efforts exerted by all state institutions to regain control of this precious spot from the land of Egypt,” he elaborated. “There is a consensus and determination among the new board members of the company to complete the success achieved by the previous board, despite all the difficult circumstances, and to overcome all obstacles facing the company, and turn them into real opportunities in order to achieve profits for the shareholders who trust the capabilities of the company.”

Additionally, he explained that the cement sector is one of the most important elements driving real estate and the infrastructure industry in Egypt, which witnessed one of the largest growth during the last period.

He affirmed the group’s commitment to continue investing in Egypt regardless of the difficult circumstances, saying, “With each passing day, we are confident of the return of stability to the Sinai.”

Magdy expected to increase the demand for cement regionally if the reconstruction of some countries in the region begins, noting that the company’s new management is keen on acquiring an acceptable proportion of these new markets’ share.

He stressed that Sinai Cement’s workers are the top priority of the company’s board of directors and will continue to be its main success partners, and went on to add that he visited the company’s factory in Al-Arish, the first visit of a managing director since 2011.

The last general assembly of the Sinai Cement company approved the amendments to the formation of the company’s board of directors during 2018 by a legal majority which now includes 9 members.

Furthermore, the expected increase in energy prices in the coming period, both for electricity or gas, will lead to higher prices, Magdy said, adding that “If the consumer does not accept the increase in prices, companies will bear it in the form of increased losses. Moreover, there is a surplus in the cement local production amounting to 30m tonnes.”

Magdy expected that his company would improve in the coming period, after the restructuring of the company’s board of directors, headed by Jacques Merceron, representative of the French Vicat cement company. Additionally, he projected this improvement due to the operation of the second production line, which was suspended.

The cost of cement production is relatively low due to the decline in the dollar prices, he noted, explained that cement prices will not be affected by this decline due to the market nature.

He expects that the new increase in electricity prices announced by the government will raise prices by 15-25 %.

Entering African markets is one of the company’s plans that will considered in the coming period, Magdy pointed out.

The company’s managing director highlighted that some companies resorted to cement export owing to the substantial market oversupply, but in small quantities, pointing out that it is very difficult to export, because there are strong competitors in the global markets, led by Turkey, Saudi Arabia, and Tunisia, as well as the lacking competitive price by the Egyptian product due to increased production costs.

Over and above, Magdy said, “Hassan Rateb, the former chairperson of the board of directors of the Sinai Cement company owns only 9% of the company shares, and Vicat has a majority stake. At the last general assembly, there was an understanding between the members of the board of directors, to appoint a president of Vicat’s board of directors for Sinai Cement instead of Rateb, and I took the position of managing director with full authority to develop the company.”

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