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[December 2009]
Lecico Expands Its Tile Manufacturing Investment Plan
The board of Lecico Egypt SAE (Alexandria, Egypt) has approved an expansion to its original programme to build a new tile plant in Borg El-Arab (Alexandria), Egypt. The expanded investment plan will increase the planned capacity of the plant to 17 million square metres per year – 12.8 million square metres of red body tiles and 4.2 million square metres of gres porcellanato or glazed porcelain floor tiles.
“This project will increase Lecico’s existing tile capacity by over 70%, a significant expansion justified by the strong demand and steady growth in profitability of our tile business,” commented Gilbert Gargour, Lecico Egypt Chairman and CEO. “For several years now our tile plant has 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. I am also very enthusiastic about the prospects for glazed porcelain tiles – a new high value product for Lecico with potential markets across Europe and the Middle East.
“If current market conditions hold constant, this expansion has the potential to generate incremental annual revenues of around LE 490 million when the project is running at full capacity. This should be quite profitable for the company as these sales should be achievable with only a limited increase in distribution and other overheads.”
The plant is expected to cost around US$42 million, of which the company has already invested US$8.7 million to date on the project.
The investment will be completed in two phases. Each phase will have a capacity of 6.4 million square metres of red body tiles and 2.1 million square metres of porcelain tiles. The first phase will cost around US$27.5 million. The red body portion of this first phase will begin operations by Q2 2011 and the porcelain phase will begin operations by Q4 2011.
The second phase will cost around US$14.5 million with red body tiles expected to begin operation by mid 2013 and porcelain tiles by early 2015.
This new plan is an expansion on Lecico’s plan to build a 3.8 million square metre porcelain tile plant for US$12.5 million which was announced in November 2007 and temporarily suspended in light of the economic environment at the end of last year.
ENDS