Sources told Daily News Egypt that Qalaa Holdings is now implementing a restructuring plan to its subsidiary ASEC Engineering to control expenses.
The plan aims to secure savings of EGP 17m per annum, in conjunction with reducing financial debts to banks by EGP 50m, which lowered debts to banks to EGP 154m at the end of September, down from EGP 204m in September 2015.
The restructuring comes in light of the high cost of sales since the beginning of 2016, in parallel with the price increases of spare parts and assets used in operations, on the back of the plummeting value of the national currency against the greenback, as well as the increase of wages.
ASEC Engineering manages cement factories. The total production capacity of the factories it operates in Egypt amount to 13.5m tonnes per year (1.125m tonnes per month). In total, Egypt produces 50-60m tonnes of cement per year.
ASEC Engineering has been facing trouble since the first half of this year on the back of the halt of one production line in a constructions material company run by ASEC. The line stopped for about six months due to maintenance, which negatively impacted the profit margin of the company.
However, the company has succeeded in raising the share of foreign projects by about 21% of gross profit compared to 18% in September 2015.
ASEC Engineering revenues rose from EGP 471.4m in the first nine months of 2015 to EGP 500.6m in the same period of 2016.
