Seklam for Dairy Industries, a subsidiary of Al Mansour Group, aims to increase sales by 25% this year. General manager of the company, Alaa Al-Wakil, said that sales dropped by 25% in the first quarter of 2017.
However, he expected sales to improve by the end of the third quarter. Al-Wakil told Al-Borsa that the company is about to finish consuming all its production inputs imported before the flotation of the pound, with only 5-10% remaining.
He explained that the company imported input requirements enough for 4-12 months before the flotation, noting that most prices rose following the flotation, such as the price of milk powder, which hiked from $2,800 to $3,500 per tonne.
He pointed out that the year 2017 is the most difficult in the field of food industries due to the high prices, which led to a recession in the market and impacted the volume of sales.
He noted that the company raised salaries between EGP 1,200 and EGP 1,500 by 25% following the flotation.
Al-Wakil said that several factors led to the increase of final prices, such as the high cost of production inputs, as well as the fees paid at ports and for transportation, along with maintenance.
He explained that the food safety law will increase the quality of the Egyptian products and improve their reputation in foreign markets, adding that the majority of exports go to Arab countries. He pointed out that major companies compete through prices and quality, while smaller companies can only compete through prices.
As for the challenges facing the sector, Al-Wakil said that the cost of energy and other utilities, such as water, have increased over the past two years.
He added that the state supports the food industry by prioritising it in terms of importing raw materials. He stressed on the need to inject more hard cash into the banking system to cover imports of production inputs.
Moreover, Al-Wakil said that the African market is very promising, but entering African markets is a difficult challenge for Egyptian companies due to many reasons, such as the high cost of transportation and the difficulty of maintaining a cold chain in Africa.
He suggested that Egyptian companies can establish import companies in Africa and that the state can support them through signing agreements with various African authorities to protect these companies.
He pointed out that his company established two subsidiaries to distribute its products in Nigeria.
Al-Wakil said that Arab countries are the largest importers of Egyptian products, as Europe bans entry of Egyptian dairy products due to a lack of veterinary agreements.
He noted that his company invested EGP 100m in 2016, which was allocated for expanding the yoghurt factory in order to double capacity to 17,000 tonnes.
Furthermore, Al-Wakil said that the company intends to inject EGP 10-12m this year to buy equipment that can facilitate production at the yoghurt and juice factories.
He added that the company exports its products to a number of Arab and foreign countries, including Iraq, Jordan, Yemen, the United States, and Canada, and it aims to enter new markets in Africa and Asia in the coming period.
He explained that the African market is already an important destination for the company’s products, especially the markets of Djibouti, Kenya, Madagascar, Mauritania, and Somalia.
He noted, however, that the company halted exporting in 2015 and 2016, as it mainly relied on exporting to Syria, Libya, Iraq, and Yemen, and the instability of the political and economic conditions in those countries forced them to halt exports.
As for the target markets in 2017, Al-Wakil said that the company aims to expand to the markets of Ghana, Nigeria, Morocco, and Algeria.
He added that the company also intends to raise its exports size by 300% in 2017, noting that the company takes part in foreign food industry exhibitions, such as the Food Africa Expo, to learn more about the developments in the sector and look for potential investments in other countries.