Cairo – Mubasher: Obour Land’s profit margins are expected to increase through price hikes despite a projected decline in volume, a new report by Pharos showed.
So far in 2017, the company’s volumes have been down on a year-on-year basis, with both January and February recording 20% lower volumes; however, Obour Land’s management expects March to be positive with volumes increasing year-on-year during the month.
“Management have reiterated that they will carry on with increasing prices gradually, as they have been since the turn of the year reaching a 10% increase between December and April. This will enable Obour Land to realise targeted GPM levels of 23% at the foreign exhange rate of 18 EGP/USD,” Pharos added in its report released Thursday.
Through these price hikes and volume declines, the company’s management believes “it will attain revenue growth between 25%-30%, targeting EBITDA and net profit margins of 15% and 10%, respectively,” the report added.
The food and beverage firm also seeks to increase its market share in the white cheese market to 42% in 2017 and 45% in 2018.
Obour Land is still on track to introduce new products in the second quarter of 2017, according to the company’s management, who added that they are targeting full utilisation by 2018, which translates to a 6% market share.
“Management believes that they will attain their goal through their current distribution network, brand equity, and a competitive pricing strategy in light of peers’ latest price hikes,” Pharos said.
