Cairo – Mubasher: Misr Cement Co. (Qena) reported on Wednesday its financial results for 2020, announcing that it was able to achieve positive results despite the challenges of the Coronavirus pandemic.

Misr Cement Co. (Qena) reported an increase in its standalone net profits by 34.4% to EGP 47.38 million last year, compared with EGP 35.20 Million in 2019.

Meanwhile, consolidated net profits decreased marginally to EGP 33.85 million, from EGP 34.67 million in 2019, taking minority rights into consideration, according to the company’s disclosure to the Egyptian Exchange (EGX).

The cement company’s debts decreased from EGP 485.3 million in 2019 to EGP 444.5 million in 2020.

Earnings per share (EPS) increased by 34.9% to EGP 0.58 in 2020, compared with EGP 0.43 in the previous year.

Despite a decline in sales, the company revealed that it was able to reduce sales costs as well as selling, general, and administrative expense expenses by 10.6%.

“We proved our resilience in the Egyptian market despite the declining domestic demand, which dropped from 48.7 million tonnes in 2019 to 45.9 million tonnes in 2020, and the decreasing cement prices, which fell by around EGP 150 per ton by the end of 2020,” Managing Director of Misr Cement Co. (Qena), Tarek Talaat, said.

Speaking to a virtual press event earlier today, Talaat said that the Egyptian cement industry is challenged by the current market status, with a large oversupply of cement, as demand stands at nearly 46 million tonnes, while supply is near 78 million tonnes.

The Egyptian government has supported the cement industry amid the pandemic be reducing electricity prices by EGP 0.10 per kilowatt last year, he noted.

The Managing Director indicated that further support could be needed in reducing natural gas prices for cement factories to reduce the use of imported coal, especially as coal prices are expected to rise globally.

The company has expanded in the use of alternative fuel, reaching 10% to 15% of its energy mix, he revealed, noting that the lack of access to waste is limiting the company’s ability to increase this share as part of efforts to switch to environmentally friendly fuel.

In addition, Talaat noted that as the market is challenged by an oversupply, increasing cement exports could help the industry, suggesting exempting exported cement from the EGP 35 per tonne development fees.

However, raising exports alone is unlikely to solve the industry’s problems with many countries in the region competing in the market and also seeing an oversupply of cement in their respective markets.

Talaat further noted that the company succeeded in increasing its exports to Sudan from 60,000 tonnes in 2019 to 186,000 tonnes in 2020.

Another area in which the government has helped the industry is increasing demand with the national megaprojects and the establishment of new cities, he added.

Talaat said that despite an expected increase in costs due to the rising coal prices, it is unlikely that cement prices in Egypt will increase next year, with the market seeing fierce competition amid the supply glut.

Speaking about the outlook for the industry, Talaat said that with the market seeing an oversupply, it is normal for old production capacities to exit the market, after years of achieving negative results, while newer modern capacities could merge into larger entities to improve efficiency.

Nonetheless, the Managing Director said that the company currently has no plans to increase production capacities or raise its capital.

It is worth noting that the company’s Board of Directors has recommended the distribution of EGP 0.25 per share as cash dividends to shareholders for last year.