Egyptian Consumer Businesses to Become More Lucrative in Q4 2023: HSBCSource: www.export-egypt.com 7/31/2023, Location: Africa |
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Egyptian companies operating in the consumer sector are expected to achieve higher profits during the fourth quarter of 2023, according to a report by HSBC Global Research published.
The report expected profit margins of Egyptian consumer goods companies to decline in the second and third quarters of 2023, before recovering in the last quarter of the year. HSBC said the devaluation of the pound, which boosted inflation, had a negative impact on Egyptian companies' profits. For the first quarter of 2023, the report noted that "margins remained resilient on the back of the sharp devaluation since end-October 2022. The gross margins were supported by low-cost inventory, while revenue growth was mainly driven by pricing." HSBC expected the price-to-earnings ratio (PE) for Egyptian consumer businesses to reach 890 percent during the next 12 months, up from 700 percent before the pound’s devaluation in October, yet below a five-year average of 1000 percent. It is worth noting that the Egyptian pound exchange rate against the USD has undergone frequent changes since March 2022 on the heels of the Russian-Ukrainian war. The USD/EGP rate jumped from EGP 15.7 to EGP 18.56 in March 2022, then moved gradually to EGP 19.66 until 28 October, when it surged to EGP 23.15. By March 2023, the USD stood at about EGP 30.9, where it remains today. Applying a flexible regime for both exchange rates and interest rates is a key commitment of the Egyptian government under its four-year $3 billion loan deal with the IMF. It is worth noting that Egypt’s Purchasing Managers Index (PMI) for the non-oil private sector rose in June to 49.1, up from 47.8 in May. The figure is the highest since August 2021. |
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