Egypt’s Juhayna Food Industries is planning to cut investment in 2017 due to consumers’ low purchasing power and increase prices by 5-10 percent this year, the company’s chief executive said.
Juhayna, Egypt’s largest dairy and juices producer, expects first-quarter profit to fall but results should begin to improve in the second quarter, CEO Seif El Din Thabet told Reuters.
“We have invested around 450 million Egyptian pounds in 2016 from a total of 500 million pounds of expected investments,” Thabet said. “This year we will decrease investment and it will be much less than last year because of the recession and low consumer purchasing power.”
Established in 1983, Juhayna makes juice, milk and yoghurt products for export across Africa and the Middle East. It also sells a limited range in European and U.S. markets.
Record inflation triggered by a currency float on Nov. 3 and IMF-endorsed austerity measures has further dented the purchasing power of ordinary Egyptians already suffering the effects of years of economic and political turmoil.
Core inflation hit its highest in more than a decade in January at 30.86 percent.
“Our production capacity sufficient for our needs until 2018, accordingly there is no urgent need for expansion. We want to focus on improving our cash flow,” he said.
Inflation is forecast to rise again this year as further austerity measures are expected.
The company has gradually increased prices by 35 percent in 2016 and is expecting to further increase its product prices.