Asharq Al-awsat English Middle-east and International News and Opinion from Asharq Al-awsat Newspaper

Constructions Sector Booms in Egypt

Constructions Sector Booms in Egypt

Sunday, 26 November, 2017 - 11:15
Workers are seen at a construction site as they work to build an extension to Mall of Arabia in Cairo, Egypt, March 22, 2017. REUTERS/Mohamed Abd El Ghany REUTERS/Mohamed Abd El Ghany

Effects of monetary and financial reforms carried out by Egypt on real-estate and construction sector companies have varied. Constructions sector in Egypt grew around 8.5 percent during the first nine months in 2016-2017 - the second highest growing sector after telecommunication in that period.

While some benefited from floating the Egyptian pound that coincided with expansions in infrastructure projects, others were undermined by the increase of energy prices and rise of imported input costs.

Elsewedy Electric managed to double net profits during the first nine months of current year, reaching EGP4.6 billion compared to EGP2.4 billion in the same period of last year.

The revival of the cable manufacturing company profits is supported by the sharp rise of its revenues in the third quarter (EGP11.4 billion), in which they doubled compared to the same period in last year. The company forecasts that revenues will reach around EGP40 billion in 2017.

Arqaam Investment Bank attributes this leap in business outcomes to floating the Egyptian pound, amid gains of currency differential resulting from exported activity in which exports represent around 30 percent of sales. Arqaam notes that the company reserve of copper, purchased before floating the currency, reduced the effect of increasing manufacturing cost during the first half of 2017.

The Central Bank of Egypt ceased its protection of the domestic currency in November, allowing the currency to drop sharply and lose during the fourth quarter of the year more than half its value infront of the dollar currency.

Elsewedy Electric cables' sales dropped in the recent period. During the third quarter it dropped around 27 percent compared to the same period of last year. Analysts attributed this to pressures on demand in the Gulf markets.

Elsewedy projects’ revenues grew during the past two years – it increased from EGP2.7 billion in 2014 to EGP6.4 billion in 2015 then EGP9.5 billion in 2016.

Editor Picks