Lecico Egypt’s (LCSW.CA) board of directors has approved a plan to build the second phase of its tile plant in Borg El-Arab (Alexandria), Egypt.
The investment plan will increase the operating capacity of the plant to 12.8 million square meters of red body tiles bringing the group’s total capacity to 37.4 million square meters per annum.
“The strong growth in demand for our tiles over the past year have made us confident that this additional capacity will be readily accepted by our regional markets and it is on this basis we have decided to go ahead with the project,” commented Gilbert Gargour, Lecico Egypt Chairman and CEO.
“Since early in 2012 our tile plants have been operating at full capacity and we have had to make difficult choices about allocating product as demand for our tiles has continued to grow with our increasing sales presence in the Middle East.
This additional capacity will allow us to better satisfy our customers demand and will boost our regional sanitary ware sales volumes at the same time. If current market conditions hold constant, this expansion has the potential to generate incremental annual revenues of around LE 118 million at full capacity.
These sales should be achievable with only a limited increase in distribution and other overheads.”
The second line is expected to cost around USD 7.5 million, of which the Company has expects to invest fully in the first half of 2013.
The Company is targeting first production from the line in May 2013 and hopes the line will be able to run at full capacity for the second half of the year subject to demand.
The Borg El-Arab tile plant still has space for a third phase of expansion which could accommodate a further production line of 6.4 million square meters of red body tiles or 4.0 million square meters of glazed porcelain tiles per annum. Investment costs would be comparable to the second phase of the tile plant.
The company has not yet taken any decisions on the nature or timing of this third phase investment.
Source: Press Release
