Egypt's Edita to Expand Overseas to Offset Currency VolatilityBy
Food producer plans to expand in sub-Saharan Africa and Asia
Consumer goods firms are suffering after pound was floated
Edita Food Industries SAE, the producer of Twinkies in Egypt, is planning to start overseas operations to offset local currency fluctuations.
The Cairo-based confectioner is seeking to expand in sub-Saharan Africa and Asia through manufacturing projects and exports, Chairman and Managing Director Hani Berzi said in an interview in Cairo on Monday. The company aims to have 25 percent of its revenue from outside of Egypt by 2025, he said.
“Regional expansion is an important pillar of our strategy,” Berzi said. “We need the foreign currency and in times of crises companies with export proceeds enjoyed decent profitability. We think of exports as a must, not a plus.”
Egyptian consumer goods companies have suffered since the country floated the pound, introduced value-added tax and cut subsidies to clinch an International Monetary Fund loan. The pound has halved in value since the flotation in November 2016, fueling record inflation and hurting spending power. Edita expects profit to improve in the first half as the country adapts to higher prices.
The company is focusing on restoring pre-devaluation profit margins by cutting costs and increasing the price of its products, Berzi said. The company will invest 120 million Egyptian pounds ($6.8 million) this year, mainly on maintenance, and will decide whether to proceed with the second phase of its newly-opened EO8 factory in 2019 if it sees signs of “decent recovery,” he said.
Edita last month signed a deal with Morocco’s Dislog Group to build a plant in the country and start exports there.
“The worst is behind our back,” Berzi said. “If things stabilize without surprises, the trajectory is always a smooth line of increasing volume, profitability and revenues.”