EFIC of Egypt’s Fertilizer Exports May Advance Fivefold in 2010

Egyptian Financial and Industrial Co., the biggest publicly traded maker of phosphate-based fertilizers in the Middle East, said its exports may increase fivefold in 2010 as commodity prices boom.

“Behind the recovery in exports was the higher price of strategic crops such as wheat and barley,” Suzie Nahas, investment adviser at the Cairo-based company, said in an interview in her office on Sept. 2. “This prompted people to grow more, which meant a higher use of phosphate fertilizers.”

Wheat has soared 74 percent from a three-year low on June 9 as adverse weather affected crops in Russia, Kazakhstan, the European Union and Canada. Fertilizer prices have mostly climbed and there is support for higher prices in the “near term,” Citigroup Inc. said in a weekly pricing report on Aug. 24.

Egyptian Financial’s revenue from exports in 2010 may rise to 300 million Egyptian pounds ($52.6 million), from 60 million pounds last year when sales were hit by the financial crisis, Nahas said. “There was panic in the banks and they had frozen credit they were giving to dealers,” she said.

The company is targeting total revenue of between 800 million Egyptian pounds and 850 million pounds in 2010, from 575 million pounds last year, Nahas said. Profit in 2010 is expected to be between 15 percent and 18 percent of revenue, she said.

The company will also boost exports when a 200 million Egyptian-pound, 700,000-ton capacity phosphate-based fertilizer line and a 300 million-pound 400,000-ton capacity sulphuric acid line start production in Ain El Sokhna in 2012, Nahas said.

Trade Agreement

“This plant will feed the export market, especially the Far East and African countries,” she said. “It will be lease financed. The machinery has arrived and the erection has started.”

Egyptian Financial’s exports were boosted last month by a free trade agreement with Latin America that will make its fertilizer more competitive in that continent, Nahas said. The company will also target Pakistan and Bangladesh next year as well as its usual markets in Africa, she said.

This year, instead of raising fertilizer prices, currently at an average price of 800 pounds per ton, the company asked dealers to pay in cash or within 30 days, Nahas said. There’s currently little pressure to increase prices as raw material costs are stable, although the company may raise them in 2011, she said.

The company, founded in 1929, has investment plans for expansion, prefering to raise capital rather than seek loans, Nahas said.

“To take loans now will burden your bottom line,” she said. “It’s better to do a capital increase but the market at the moment is not encouraging.”

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