Oriental Weavers Could See Modest Growth

Cairo, Egypt, Sept. 1, 2009--Oriental Weavers could see profits rise between 3% and 4% in 2009 on increased local sales, the company's said Monday.

Oriental Weavers, which exports over 60% of its production, had posted lower profit in 2008, hit by weakened sales in the U.S. market amid declining home sales, and the expiry of a one-time tax benefit for the U.S. unit.

"We hopefully expect net profit to grow by 3% and 4% this year," Haitham Abdel Moneim told Dow Jones.

"We are noticing a slight slowdown in the industry this year and we think this year will be flat or the same as last year despite an increased market share due to our innovation, quality and pricing," Moneim said.

In the first half of 2009 about 26% of Oriental Weavers total sales was from the U.S. as compared to 31% in the year earlier period. Sales in the Gulf Cooperation Council countries too declined marginally to 6% from 7% in the first half of 2008.

Moneim said sales in the U.S. floorcovering market was estimated to decline by 12-15%. However, he said, while there were early signs that American market was picking up, "we hope that U.S. market will not witness additional decline," Moneim added.

The carpet manufacturer was also looking at the local market to maintain a substantial double digit number growth, after posting 21% growth in the first half of 2009.

"Over the past years real estate was booming in Egypt and now they need furnishing," said Moneim.

Oriental Weavers' 5% rise in first half 2009 net profit to 181 million Egyptian Pounds ($33 million) was attributed to growth in local sales.

The company, which opened a factory in China three years ago that produces and sells rugs locally, is looking at Asia to offset the dip in recession-hit Western markets. It hopes to raise sales in Asia to represent 7-8% of total sales over the next five years. "Exports markets are flat, they won't move too high this year," Moneim said.

While Moneim said that the company had no intentions of buying companies or making acquisitions, he said it plans to explore opportunities in Eastern European markets through agents and distributors.