Sinai Cement registers US$4mn net losses in H1
The Sinai Cement Company (SCC) reported 28.69 million Egyptian pounds (US$3.6 million) in net losses in the first six months of 2015, the company said in a statement to the Egyptian Stock Exchange (EGX).
The latest figures compare to the EGP 88.12m in profits registered in the first half (H1) of 2014.
Total profits have decreased to EGP 33.54m, compared to EGP 181.6m in the corresponding period of 2014. On a quarterly basis, Sinai Cement lost EGP 11m in the first quarter (Q1) of 2015, compared to EGP 36m in net profits in Q1 of 2014. In 2014, the company had registered EGP 93.5m in net profits.
The company operates in the manufacturing and packaging of cement products, and owns a cement production facility in North Sinai. In 2014, Sinai Cement contracted Danish engineering company FLSmidth to provide the equipment for the former to start working using coal.
Cement producers in Egypt are suffering losses this year. Suez Cement’s net profit registered EGP 118.9m in H1 of 2015, compared to EGP 311.9m in the same period of 2014. Additionally, the Egyptian Natural Gas Holding Company’s (EGAS) dues from the government-owned National Cement Factory reached EGP 1bn.
In April 2014, the government had approved the use of coal as an energy source in the industrial sector, and cement companies in Egypt took steps to commence testing coal in thermal power generation. However, last May cement factory owners said that the specifications set by the Ministry of Environment on trade, transport, coal storage, and within the energy mix, are stricter than the European specifications.
Following the fuel prices that coincided with the start of fiscal year (FY) 2014/2015, the government has raised gas prices for cement factories to $8 per million British Thermal Units (BTUs) compared to the previous $6. The price of fuel oil increased from EGP 1,500 to EGP 2,250 per tonne.
According to Ministry of Investment data, cement production capacity is estimated at 50m tonnes per year, compared to the 80m tonnes of consumption expected by 2020.
The government’s attempts to introduce new licences for steel and cement production will not succeed in boosting production due to a lack of energy supplies, according to steel and cement manufacturers in the Egyptian market.
Minister of Industry and Foreign Trade Mounir Fakhry Abdel Nour said the government will not offer new licences for operating in the steel and cement industries before solving the energy crisis. Abdel Nour attributed a lack of new investments in these two sectors to the gas production shortage, which pushed the government to approve the use of coal as part of Egypt’s energy supply mix.
Source: Daily News Egypt
