Egypt's Al Ahram Beverages Company (ABC) registered a decline in net profits for 2001 but showed a 21 per cent rise in sales, thanks to a distribution deal with Saudi Dairy & Food Stuff Company (Sadafco) to sell beverages in the Gulf.
ABC said its 2001 net profit was 92.2 million Egyptian pounds ($19.9 million), compared with 112.9 million pounds in 2000. The sales revenue rose to 425 million pounds, from 350 million in 2000.
Executive chairman Ahmed Zayat said ABC, like other Egyptian companies, had been "challenged" by the events of 2001. Egypt's tourism sector was adversely affected after the start of Israeli-Palestinian skirmishes in September 2000, but suffered a body blow after the September 11 attacks in the US.
Rasha Al Husseiny, an analyst at CIBC Brokerage, said the share price would not change much because the results were mainly in line with expectations.
She said sales were higher than expected because of a distribution agreement in August with Sadafco to sell beverages in the Gulf. The agreement led to a 26 percent increase in non-alcoholic malt beverage volumes.
The agreement entitles ABC to sell its flavoured and unflavoured malt beverages throughout Saudi Arabia, Kuwait, Bahrain and Qatar.
The agreement supplanted ABC's previous agreements with individual distributors in each country and was described at the time of signing as a significant boost to ABC's export business.
As a result of the deal with Sadafco, ABC is in a much stronger position in the Gulf region, particularly in the critical Saudi market, which boasts the highest per capita consumption of flavoured and unflavoured mallt beverages in the world at nearly three litres per person per year.
Spirit sales volumes also rose after ABC acquired the El Gouna Beverages Company early last year, but revenue figures were affected because of interest costs from a loan taken to realise the El Gouna purchase, Husseiny said.
The company is more worried about the tourism prospects in Egypt than in the El Gouna acquisition costs because the uncertainty in tourism made it difficult to outline projections for its performance.
Al Ahram Beverages Company was one of the first public sector companies to privatise a majority stake in 1997.
"By modernising production, improving quality-control measures and capitalising on tremendous brand equity, ABC was able to unlock the potential of a long-neglected company," it said.
ABC acquired El Gouna Beverages Company, previously its only local competitor in an important segment of its business. The LE255 million deal involved the acquisition of all of El Gouna's four factories.
