Rakta Paper Last year's results are based on 48% growth in losses

Rana Mamdouh

The board of directors of the General Society of Paper Industry – Rakta, one of the public companies companies, held its unaudited financial results for the year ended the June 2019, up 48% compared to the corresponding period.

The company said in a statement today that it had a net loss of £ 122.6 million in the period from July 2018 to the end of June 2019, compared with £ 82.8 million in the course of the year. the same period.

During the same period, sales dropped to 137 million pounds, compared with 191.8 million pounds in the corresponding period.

Rakta attributed the increased losses to the stagnation of the locally produced paper market due to the dumping of poor quality imported paper, which weakened the company's ability to dispose of its products, resulting in lower sales volume and a loss of value. From the survival and continuation of the market and from it to the scale of production after the increase in the stock of paper and cardboard.

This is in addition to the rising cost of rising raw material, chemical, electricity and oil prices, wage inflation due to excessive employment and wage increases resulting from sovereign increases planned to meet the burdens of Egyptian economic reform at a time when society could not raise prices. Paper and cardboard must even reduce these prices several times.

Among the reasons, we can mention the loading of the commercial results of the company by the interest of the loans developed by the Holding for the chemical industries on the loans granted to the company Rakta, as decided by the board of directors of the holding company from the 1st July 2018 at the stated interest rates of the Central Bank of Egypt.

Some of the reasons include the loss of the value of the stock of complete paper and board production due to the fact that the company had to reduce the selling prices of the products several times, resulting in selling price lower than the industrial cost of manufactured items.

This is in addition to the attribution of fines and income to the commercial results due to the delay in the payment of sovereign insurance taxes due to the lack of cash required to pay to time.

She pointed out that the aging of machinery and equipment is a major factor in the degradation of product quality and volume of production and sales, as well as increased losses and malfunctioning. of the financial structure in recent years, resulting from the increase in mechanical and electrical failures of equipment that the company is trying to control, as well as the result of this limitation of the consumption of raw materials, gas and electricity and their impact on higher production costs.

She pointed out that the company was seeking to avoid losses and repair the financial structure by developing and rehabilitating paper and cardboard machines to adjust product quality and increase production capacity, while reducing utilization rates for raw materials, gas and electricity and increasing funding. Signature of a contract with the Czech supplier Babsel in February 2019 for the development and rehabilitation of the No. 3 paper machine, increasing its production capacity from 70 to 180 tons per day.