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Agro Trade sales up 20% to EGP 25m in 2014: Borsa Chief Financial Officer - Daily News Egypt

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Agro Trade sales up 20% to EGP 25m in 2014: Borsa Chief Financial Officer

Magdy: Current sales volume at least 35% of pre-Revolution figures, and we are targeting 10% growth

Agro Trade, an import and export company, witnessed a 20% increase in sales volume over the past year, jumping to EGP 25m compared to EGP 19m in 2014 despite the difficulties experienced by the local market.

Company chief financial officer Mustafa Magdy said that Agro Trade’s sales rose over the past year despite difficulties faced in the local market and after approximately 20% more quantities were pumped into the local market – the same level of growth experienced by the company this year.

He explained that despite the recent increase in company sales, the current figure represents only 35% of the company’s sales before the revolution, which exceeded EGP 70m in 2010.

Magdy attributed the decline to an 80% drop in company import rates from 2012-2015 to EGP 10m compared to a total volume of EGP 50m prior to that period.

Agro Trade imports fell due to the poor economic conditions that prevailed immediately after the 25 January Revolution and throughout the period that followed. Another factor involves many decisions made last year that curbed company imports.

The decision to limit dollar deposits made by the Central Bank of Egypt (CBE) last year caused a decline in imports due to banks’ inability to provide dollars. As a result, the company was forced to cut its transactions.

CBE took several measures at the start of February 2015 to set a daily ceiling of $10,000 for dollar deposits, and a monthly maximum of $50,000. Agro Trade aims to expand sales by 10% up to EGP 27.5m by the end of 2016 by entering the export market.

Magdy explained that Agro Trade began exporting at the beginning of the last quarter of 2015 and is currently exporting citrus fruits, strawberries, green beans, and peas.

The company exported approximately 2,000 tonnes of citrus since the fourth quarter of last year as well as 120 tonnes of strawberries per week and 240 tonnes of green beans.

The company only recently began exporting, according to Magdy, who explained that Agro Trade is facing many obstacles thanks to red tape and bureaucracy within the Central Administration for Agricultural Quarantine affiliated with the Ministry of Agriculture and Land Reclamation.

Magdy explained that obtaining the papers required to ship products takes a lot of time, ranging from seven to ten days, thus exposing the company to losses if they fail to comply with the agreed upon booking dates with aviation companies. Customers abroad also charge the company fines.

Agricultural Quarantine employees work from 10am to 2pm each day, which does not provide enough time to extract permits from any government entity.

The Agricultural Quarantine recently required that a committee be formed to examine each shipment at the company’s headquarters before it is sent to the airport. The shipment is then examined again in the port and these laws harm the Egyptian market’s reputation abroad.

Magdy said that the company will incur a late fee of approximately $300 per day for a single container and accused government agencies of not taking an interest in companies despite failing to provide export support for several crops. Yet simultaneously papers are being prepared for several companies’ shipments in less than a day and with minimal effort. The process is subject to “the whims of government employees”.

Agro Trade face many problems in shipping its products, which is partially due to the fact that start-ups and small companies are placed at the bottom of the import list. He noted that the company is always waiting for shipments from major companies to be cancelled or for spaces to open up at the last minute in order to ship their products.

Magdy also touched on the fact that the National Roads Company increased costs incurred by transport vehicles carrying goods on the Alexandria Desert Road to EGP 580 last year, which expands the burden on companies. Some have begun transporting their products on the Agricultural Road to cut costs but this renders the products vulnerable to damage.

On a related note, the cost of production recently increased after the government began removing subsidies for energy and many other products. This has made company exports decline both domestically and abroad, due to the presence of major companies that are more competitive.

The cost of production has increased by 15-20% since the beginning of FY 2015/2016 following increases in energy prices and an upswing in the prices of production supplies and tools.

The high cost of production increased the costs of labour and transportation by at least 10% and that high customs duties for export companies formed a burden as well. None of these factors operate in the favor of exports, Magdy noted.

Regarding the rise of the dollar exchange rate against the pound, he said this increases export companies’ profits by at least between 10-15%, especially following the most recent increases but that it is not feasible to increase the volume of company work on the global market due to an increase in the cost of production and weak competitiveness.

Topics: Sales

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