Saudi-listed Savola Group said it expects a negative impact of SAR 171 million on its fourth quarter 2016 net profit, as its wholly-owned subsidiary Savola Foods Co. in Egypt will be hurt by the recent Egyptian pound float.
The financial impact was estimated after the Central Bank of Egypt (CBE) announced the official rate last Thursday, the company said in a statement to the Saudi bourse.
Savola had taken precautionary measures in the past year, which have significantly reduced its exposure to the Egyptian pound devaluation against foreign currencies, it added in the statement. The company said this has helped it “avoid a much bigger loss.”
The food producer and distributor operates in Egypt through seven subsidiaries that make edible oil and vegetable ghee, sugar, and pasta.
Last week, Egypt’s central bank decided to freely float the pound and hike interest rates by 300 basis points as the government comes closer to fulfilling conditions required to get a $12 billion loan from the International Monetary Fund.
The official rate of the pound to the dollar is currently 15.73, according to the CBE.
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