Exclusive | Eastern Company sets sights on global markets via UAE investor-backed plan
Updated 5/14/2024 10:16:00 AM
Arab Finance: Eastern Company aims to introduce its products to international markets as part of its expansion plan for the upcoming three to five years, the company’s Chairman Hany Aman said in an exclusive statement to Arab Finance on May 14th.
Under the first phase of this expansion plan, the company’s new UAE-based partner Global Investment Holding targets restoring local production rates to their previous levels, which reached 70 billion cigarettes per year, Aman explained.
The company’s productivity was hindered due to the foreign exchange shortage crisis in Egypt, which impacted the import of raw materials and, consequently, reduced productivity, Aman highlighted.
Egypt: A Regional Hub for Tobacco Production and Export
“Once the local production target is achieved in the Egyptian market, we will leverage the substantial connections of the Emirati investor to export our products to the African markets, and the Arab ones, as per the sealed agreements,” Aman stated.
“Egypt will serve as a regional hub for the manufacturing and export of tobacco products, particularly cigarettes and fruit-flavored mu’assel, which are in high demand abroad. Then, we will target the European and American markets, while mulling over more innovative cigarette substitutes, such as vape pens or e-cigarettes,” he added.
Aman pointed out that tobacco requires time for cultivation, processing, and shipment, adding that Eastern Company is now waiting for the new tobacco crop after opening the required letters of credit.
He further highlighted that the Emirati investor has boundless potential in terms of financial solvency and extensive market knowledge, saying that they are proud of this partnership and have all the machinery and financial resources needed to make any decision based on the foreign investor's potential to provide hard currency and foreign exchange.
On September 3rd, 2023, Global Investment Holding signed a $625 million deal to acquire a 30% stake in Eastern Company. This is along with providing $150 million to Eastern Company to purchase tobacco materials needed for production.
Eastern Company reported a 16.99% year-on-year (YoY) decrease in standalone net profit for the first half (H1) of the current fiscal year (FY) 2023/2024, recording EGP 2.896 billion, compared to a profit of EGP 3.489 billion.
In FY 2022/2023, the tobacco products manufacturer logged EGP 7.657 billion in net profits after tax surged, marking a 90% YoY growth.
During the same FY, local cigarette sales rose by 13% YoY to EGP 16.5 billion, while sales of flavored mu’assel increased by 52% YoY to EGP 203 million.
On March 5th, the firm’s ordinary general meeting (OGM) agreed to the board’s decisions on signing credit facilities worth a combined $400 million with Emirates NBD Egypt, Commercial International Bank (CIB), and other banks to open letters of credit for tobacco and raw materials importers.
Furthermore, the OGM endorsed the board’s decision to use credit facilities worth $200 million from Emirati banks. This amount will be used as guarantee letters in favor of Egyptian banks to open letters of credit for suppliers.
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