Egypt Dollar Crunch May Force Italcementi to Change Regional Hubby and
Italian company has struggled to repatriate euro profits
Foreign currency shortage is hurting nascent economic recovery
Italian cement maker Italcementi SpA may consider moving its regional hub from Egypt if the country’s dollar shortage persists for another year.
The Bergamo-based company has been unable to repatriate 50 million euros ($55 million) of profit from Egypt for about a year, and is also facing difficulties in paying its foreign suppliers, according to Bruno Carre, managing director of its Egyptian unit, Suez Cement.
“It isn’t an urgent issue, but if currency availability remains tight, we will have to establish other channels to develop our activities in the region,” Carre said in a phone interview from Cairo. Egypt’s currency shortage makes it difficult to transfer money to pay dividends and to fund regional investments, he said.
Egypt’s central bank has introduced measures to reduce non-essential imports to save hard currency, though many analysts contend that a devaluation of the Egyptian pound is becoming inevitable. Even so, businesses are struggling to import materials and to transfer profits, and the bank has had to intervene to help companies source dollars, including airlines British Airways and Emirates.
Italcementi has shifted to coal from natural gas to power two of its five factories in Egypt, and plans to invest 700 million Egyptian pounds ($89 million) to do the same at two more in 2017. The company doesn’t have a problem importing coal but faces a “difficult process" and “red tape" to source dollars to pay suppliers, Carre said.
“At some point my foreign suppliers could say, ‘if you’re not paying I won’t continue supplying,”’ he said.