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Monday, 24 July 2017

Some manufacturers are pressing ahead with expansion plans despite high cost of capital

A number of manufacturers have signaled that they are pressing ahead with expansion plans despite high costs of capital after successive interest rate hikes. Packaging manufacturer HiPack, for example, plans to invest EGP 3.5 bn in new production lines over an unspecified period, HiPack’s export director Ihab El Shoury tells Al Shorouk. The company is looking to double exports, which El Shoury says is worth the capex outlay despite high current costs of capital after successive interest rate hikes.

Cheesemaker Obour Land will be pressing ahead with its new juice and dairy factories, CEO Ayman Hamed also tells the newspaper. Hamed dismissed news of delays as “rumors,” saying the company plans to bring the two new plants online soon and will launch five new production lines in 2017. The company is confident on the growth outlook for its market, he said.

Not everyone is investing in Egypt, though: Dairy producer Domty is waiting on feasibility studies for a manufacturing facility it’s considering establishing in Ethiopia, according to Vice Chairman Mohamed El Damaty. Domty was one of several companies to delay planned investments due to the slump in market conditions and rising costs, particularly after the government’s latest decision to hike fuel prices. Misr Hotels Company and Arafa Holdings had also announced they would be postponing plans.

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