The National Company for Maize Products (NCMP) is considering temporarily suspending its expansion plans worth EGP 1.2bn due to lower production volumes of the company. The lowering production rate is driven by recession in global markets as well as the ongoing US dollar price hikes in the Egyptian market.
A senior source at NCMP, who requested anonymity, said that these expansions aimed to establish a new production line of fructose, estimated to cost EGP 1.2bn and produce 160,000 tonnes annually.
The NCMP planned to raise its production size of fructose to 280,000 tonnes per year to drive up sales and increase profits by 10%. The company was aiming to complete the expansions within two years from the date of receiving the necessary approvals and securing the fund.
Fructose, known as fruit sugar, is used for sweetening candy, jam, jelly, soft drinks, and juices. It provides the same taste as regular sugar and is also used for sweetening foods used for weight loss.
In a related context, the source explained that his company is suffering from the ongoing successive hikes in US dollar prices in the domestic market due to the abundance of the greenback, as NCMP imports 90% of its raw materials.
He highlighted that the company’s stance to cut the amount of maize products is due to the recession taking hold of global markets. Collectively, he added, these factors forced the company to reconsider its expected net income during the current year to reach EGP 134.9m compared to a target of almost EGP 151m.
The company also reduced its forecast for sales this year to reach EGP 927.4m compared to intended sales of EGP 981m.
In another context, NCMP results in the first half of this year indicated a net profit of EGP 30.686m versus EGP 20.689 year-on-year (y-o-y), with an increase of 48%.
The source pointed out that the rise in profit was the result of higher sales in the domestic market in conjunction with controlling cost increases resulting from importing yellow corn and the prices of energy and electricity.
Sales amounted to EGP 412m during the first half of this year compared to EGP 405m in the corresponding half of the previous year—a 1.7% growth.
During the past year, NCMP’s financial statements showed that the company achieved a net profit of EGP 70.87m compared to EGP 83.75m by the end of 2014, down by 15.8%.
Meanwhile, revenues declined in 2015 to EGP 841.7m, compared to EGP 932.2m during 2014. The company had halted a factory for maintenance, while prices of natural gas and electricity rose, in addition to financing expenses.
NCMP is engaged in the production of natural sweeteners from corn, such as fructose, glucose, and dextrose, which are used in the production of candy and soft drinks.
The paid-up capital of the company stands at EGP 295.1m, distributed among 29.5 million shares, with a nominal value of EGP 10 each.