Egypt Duty Free profits rose by 13.7% this fiscal year owing to differences in currency exchange rates following the devaluation of the Egyptian pound by 112 piastres against the US dollar in March.
These currency differences provided the company EGP 11.73m in profits this fiscal year, thus sheltering them from the negative repercussions of the decline in tourism activity and fewer arrivals from abroad, according to an official source at the company who requested anonymity.
Egypt Duty Free’s activity is influenced greatly by the movement of foreign currencies against the Egyptian pound, especially the US dollar and the euro as importing goods—such as electrical appliances, alcoholic beverages, and perfumes—is done in these currencies.
The company resells these goods in foreign currencies through its outlets across airports, seaports, and land ports. The company also sells goods inside Egypt in local currency, which is adversely affected by any decline in the pound’s value, as it reflects in the company’s profit margins.
Net profits of Egypt Duty Free rose to EGP 61.24m in fiscal year 2015/2016, compared to a net profit of EGP 53.85m the year before.
The company has faced some tough challenges due to declining tourist numbers over the past five years but has tried to overcome this challenge by offering promotions, the source said. Additionally, Egypt Duty Free increased its number of branches to 27 branches in order to offset the impact of the tourism slump.
The source added that the company’s revenues rose to EGP 372.56m during fiscal year 2015/2016, compared to EGP 335.74m in the previous fiscal year, owing to the success of the company in increasing the volume of goods sold at its airport outlets.
The company recently opened two outlets at Nabq Bay in Sharm El-Sheikh and Senzo Mall in Hurghada. The opening of its outlet at Strip Mall in Sheikh Zayed cost EGP 7.2m in investments.
Tourism has dropped dramatically over the past five years, especially after the downing of the Russian aircraft over the Sinai Peninsula in October 2015. The number of tourists who visited Egypt in 2015 fell to 9.3 million tourists, dropping by 6% from 2014. That led the sector’s revenues declining to $6.1bn, down 15% from revenue generated in 2014.
The sector’s losses are soaring. The Central Agency for Public Mobilisation and Statistics (CAPMAS) stated that the number of tourists arriving to Egypt in May 2016 was 431,800 tourists. This is a decline of 51.7% from the same month in 2015, during which Egypt received which 894,600 tourists.
The source said that the company has enough stock of necessary goods to fill the company’s branches across Egypt and meet customers’ demands. “The company has EGP 67m of goods in storage,” he noted.
Egypt Duty Free aims to achieve a net profit of EGP 61.023m in fiscal year 2016/2017, according to the estimated budget data.
The issued and paid-up capital of the company amounts to EGP 93.75m, divided across 93.75 million shares with a nominal value of one pound per share.