At Eastern Tobacco 6th of October factory complex, one of the largest industrial complexes in the MENA region, Eastern Tobacco's (EAST) CEO and Managing Director, Hany Aman, shared that the company's continued success in financial and production results is due to a larger vision that considers various market changes and obstacles. The current board of directors has implemented a range of plans and strategies to increase efficiency and overcome challenges, building upon previous efforts.
According to Hany Aman, CEO and Managing Director of Eastern Tobacco (EAST), the company places a high priority on its shareholders. Aman shared that EAST holds regular meetings with foreign investors who have invested in the company's shares to ensure they are up to date with the latest company updates.
One of the main concerns for investors was the second tobacco license that Philip Morris had won. However, EAST's "What If Strategy," which is based on a blend of hypotheses, including market share, product quality, and production capacity, helped ease those concerns. Aman believes that this approach has been an essential factor in achieving the company's continued success.
Hany Aman
CEO and Managing Director Eastern Tobacco
Although Eastern Tobacco (EAST) lost the advantage of manufacturing on behalf of Philip Morris due to the latter's new production license, the company's net profit has continued to increase year-on-year. In fact, EAST has reached new historical levels in both its top and bottom lines. This impressive performance speaks to the company's resilience and ability to adapt to changing market conditions. Despite facing challenges from international brands and losing a key manufacturing partnership, EAST has managed to maintain its financial strength and position in the market.
*Prices as of 07/06/2023 session last trade price
Eastern Tobacco (EAST) has achieved its biggest ever market share, according to recent reports. Despite this, the introduction of new cigarette pack types by international brands within the same price category has presented a challenge for EAST. However, the company's products have remained resilient in the face of this competition. EAST's ability to maintain its market share in a changing market is a testament to its Strong Brand Equity and the quality of its products. It will be interesting to see how EAST continues to navigate this dynamic market and adapt to changing consumer preferences.
Eastern Tobacco's (EAST) management plans for efficient production have included an early retirement plan, which has been successful in reducing the company's workforce. Within less than six weeks of the announcement, around 3,300 workers had joined the plan, and an additional 2,000 workers had reached retirement age. As a result, the company was able to reduce its number of workers from 14,000 to around 8,500.
This early retirement plan did come with a one-off cost of EGP 1.6 billion, according to Hany Aman, the company's CEO and Managing Director. However, Aman believes that the reduction in the number of employees has led to increased efficiency and positive impacts on the balance sheet. He notes that the company now has fewer people and higher efficiency, which has positively impacted its bottom line.
To further support its efficient production plan, Eastern Tobacco (EAST) has implemented a full plan of digitalization. This includes the installation of a state-of-the-art SAP ERP system, which will enable EAST's management to control and manage the inputs and outputs of the production process more efficiently. The SAP ERP system is expected to be fully installed by the end of 2023.
This digitalization process is expected to have a significant impact on the company's bottom line, as well as on its ability to adapt to changing market conditions. With better control and management of the production process, EAST will be able to optimize its operations and reduce costs, while also improving product quality and speeding up time-to-market.
As the company continues to invest in digitalization and other strategies to enhance efficiency and effectiveness, it will be interesting to see how these efforts translate into financial results and market performance. With its strong brand and commitment to innovation, EAST remains well-positioned to succeed in a dynamic and competitive industry.
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