Could you give us the share holder structure of your recently privatized company and the different fields that you are involved in ?
On the 13th of March 2000, Cimpor group took possession of 92% from Amereyah Company's shares at the price of EGP 91 per share. Amereyah Cement Company is listed in the Egyptian Stock Exchange. On 13th April, a general assembly of the company was held and a new board of directors was formed from 5 members who represent three different parties according to the law No 159 for the year 1981. Three members represent Cimpor group, one member represents the private sector. The last member represents the laborers share holders union that own 5% of the company's shares.
Cimpor group delegated some of its representatives in different fields in order to study the company's activities that's still in progress. They have plans for expansion in order to increase their portion in the cement market of Egypt.
Q2. As you may know, the readers of Forbes Global are always interrested in seeing the important financial figures for a company, such as net profit, turn over and so on. Could you provide us with some of these figures for Amereyah ?
The cement production of Amreyah has increased to 2.5 m/t last year. And the total income was 518 million EGP. The net profit was 154 million EGP. The equity was 312 million EGP, total provisions 191 million EGP.
I understand that your net profits have slipped by 5.8% since you started to pay tax. Is this correct ?
Our net profit was 154 million last year (1999) that enable us to raise the EPS from L.E. 6 for the year 1998 to L.E. 6.1 for the year 1999. And we hope in the year 2000 to reach L.E. 6.25 per share.
The gross shares of the company is 20 million shares and the expected net profit for the year 2000 is L.E. 160 million after taxes.
Should the company not have enjoyed another year of tax holiday ? Did you obtain one more year of exemption from the ministry of finance?
We were enjoying 10 years tax holidays effective the year of the beginning of the production which started in July 1988 to be ended July 1998. We requested the ministry of finance to extend the exemption for another year beginning from July 1998 till June 1999 which still under negotiation. If we succeed to get their acceptance we will get back the paid tax for the last year.
Could you tell us about your investments in new technology, and your plans to become more competitive ?
Firstly, we plan to increase our capacity to reach 4 million tons. This is our first objective. The second objective is to upgrade the existing equipment to increase its productivity to 2.7 million tons per year. We are on the way to achieve this objectives since the design capacity of the factory was 2.1 million tons and it had reached 2,5 million tons by last year.
This year, the target is to produce 2,6 million tons and we are confident in achieving 2,7 million tons next year. After erecting new lines of capacity 1,4m/ton/year, the total capacity will be 4 million tonnes per year in 2003.
Are you planning to upgrade your production lines ?
Yes, it is upgrading in th mill house that will allow us to increase our production to 2,6 million tonnes. At the end of the expansion it is planned to increase the annual production to 2,7 million tons.
I understand that you are going to upgrade two of your production lines, which ones are they ?
They are at the Amereyah plant. We have two identical lines. We are improving the system of conveying the cement from the mills to facilitate increasing the production. So we will buy clinker -this is what you grind up to make cement- from other companies to reach capacity up to 2,7 million tons per year.
Am I righ to think that you plan to built another line as well?
Yes, this objective of this too is to help us reach our production target of 4 million tonnes.
What are your plans for international expansion ? What is your exportation strategy ?
We tend to sell our product locally. The price of the cement here is about L.E. 190 per ton. If we export, this price will drop to around L.E. 150, so we would loose L.E. 40 per ton. There is a huge local market in Egypt and last year, 4 million tons of cement were imported into Egypt.
This is a huge market with a lot of competition, how do you cope with this situation ?
We produce very high quality cement. This is a fact, not a opinion. This means customers are willing to use our products. We get about L.E. 220 per ton. The specification of our cement is higher than the British standards and all of the construction companies ae aware of that.
Secondly, we have a very good network of agents, spread all over the country, and they help us distribute our product smoothly.
Are these agents construction companies, which groups are you working with ?
We are working with around 300 agents. Their demand which is about 3 million tons per year exceeds our production which is 2,5 million tons yearly.
| How are going about exceeding the design capacity of yourexisting factories ?
We have employed a technical assistance company called ASEC, and they have provided Swiss and Spanish experts to ascertain what the possibilities. They are supervising the maintenance works of the factories. Our employees get five years training, so they are very well qualified.
Our kilns have the potential to be functional for about 330 days per year when the European average is around 300. We are presently functional for around 330 a year, so we increased productivity by 10% in this manner.
Are you trying to increase production every year ?
Well, we will soon reach the maximum available production capacity. We have already exceeded the design capacity by 10%.
Amereyah Cement is planning to produce sea water cement, how is this plan proceeding?
Production of sea water cement began last May 1999, and last year we produced around 200,000 tons of this type. The profit from this cement is about double the profit from our other types.
And what is the market for this cement ?
The consumption of this cement is about 15% of our production. This cement is used to built ports, bridges and for foundations of buildings.
You mentionned before the interview that the cement industry is a cause of pollution. What isyour commitment to the environment, and what is your policy concerning these issues?
Well, our factory is new. It was built in 1988 and provided with electrostatic filters. Our local legal limits of particles emission is 500 mgs per cubic meter. We are presently producing around 200 to 250 mgs per cubic meter. So we are working in accordance with the law. We have spent a lot of money to reduce our emissions to that limit.
The ministry od Environment installed detectors in different points in the cement companies to mesure the emissions. These monitors are linked directly to a certain office inside the ministry building. For the last two years, we have not received any notice according that matter. Apart from the filters, we improved the conditions of environment by increasing the green area inside and around the factory which has presently a surface of about 300 m by 500 m square. We have been accredited the ISO9002 and ISO14001 by TUV association.
The Prime Minister mentionned that you were the last cement company tobe priatised.
I think our company is the last one to be privatized for this year.
Do they want to privatise any more, there are two cement companies left.
Well, there is only the National Cement Company, and a stake of 49% from Helwan company still with the public sector.
Do you think that the privatisation process has been effective?
Yes I do. Production has been almost doubled in some companies, such as Assiut Cement Company
What are the main challenges you anticipate in the near future?
We conducted a study into the labour situation in the company, and we discovered that we are somewhat over-staffed. We have three or four times as many employees as a similar factory in Europe, because we are not as yet fully automated. In some departments we are employing 150 people, compared to five or six people in a similar department in a European cement company. People doing these jobs are paid well, and only work in the manual departments for five years. 200,000 bags of cement are loaded every day, by human hands.
We are therefore working on reducing this number from the present level of 1,860 workers. There are about 7% of the total labor in Egypt are unemployed, so we are keen to avoid increasing that pourcentage.
We are planning to open new activities such a readymix concrete, cement transportation and sacks factory to shift the overstaff to these activities.
At Forbes magazine we are always interested in the background of the major decision makers in industry. Could you tell us about you experiences prior to working for Ameryah Cement?
I am an electrical engineer, and graduated from Alexandria university in 1962. After this I worked on the Aswan High Dam for 6 years with Arab Contractors Company. After that, I worked for Alexandria cement company from 1968 until 1984. Then I transferred to the project of Amereyah Cement Company as a project manager. I got training in Switzerland, France and United States. When the company started production I was appointed as a Chairman & Executive manager and I have a contract for the next three years. |
