CAIRO: Egyptian ceramics maker Lecico said its unaudited consolidated net profit dropped 14.3 percent in 2010 to LE 94.4 million, according to a statement.
The figure is down from last year’s LE 110.2 million. Consolidated net revenues were down 3.8 percent, reaching LE 1.02 billion, from LE 1.06 billion in 2009.
The board is proposing a capital increase by issuing bonus shares to shareholders at the rate of 1:3; the request is pending approval by the Capital Market Authority.
A total of 20 million shares are to be distributed at a par value of LE 5 per share, which would raise paid up capital from LE 300 million to LE 400 million.
Lecico cited continued weakness in sanitary ware sales volumes, adding that management has decided to “book exceptional provisions against its insurance claims relating to custom duties on imported products destroyed by the fire of its export warehouse in June 2010.”
In the fourth quarter of 2010, Lecico posted a drop of 11 percent in revenue, reaching LE 236.6 million, 54 percent of which came from sanitary ware.
Meanwhile, sanitary ware revenue dropped 21 percent to LE 128 million, on the back of a 25 percent decrease in volumes, of which 63.5 percent were exports.
Net profit slid 61 percent in the fourth quarter to LE 11.1 million.
Lecico Egypt Chairman and CEO Gilbert Gargour said that the fourth quarter of 2010 “proved to be a challenging one operationally, with weaker demand in European export markets due in part to the risks of contagion within the eurozone as a result of the Greek and Irish crisis.”
The local market also saw weaker movement, but that was largely due to “voluntary restriction on quantities delivered to wholesalers in order to encourage better price discipline in the market place,” he added.
Lecico expects continued weakness in 2011 due to “European demand slower recovery and Egyptian sales probably very weak until we see political progress.”
The company also cited one-off provisions and finance charges of LE 11.2 million which kept it from reporting a growth in operating profits.
The drop in volumes, he said, were somewhat offset by improved average prices, which rose 6 percent over the previous year.
Regarding customs and penalties owed on complementary products imported for reexport and destroyed the June warehouse fire, the Customs Authority is asking Lecico to pay waived customs fees on these products and pay a penalty for the period since they were imported. The firm is however contesting these fees and penalties.
Lecico will announce its audited results on March 10.
