UTC to Manufacture PM Products for Egypt

Philip Morris is set to start manufacturing its products for the Egyptian market at its United Tobacco Co. (UTC) subsidiary, reports Daily News Egypt.

The current licensee, Eastern Co., will continue to manufacture Philip Morris’ cigarette products until its production stock has been depleted.

Philip Morris stated that it is proud of the strategic partnership with the state tobacco company, which lasted for nearly half a century, and is looking forward to sustaining this partnership through Eastern’s shareholding in UTC. In May, Egypt’s General Assembly approved Eastern Co.’s plan to buy a 25 percent share in UTC for EGP100 million ($5.2 million), according to the Enterprise Press.

Eastern Co. Managing Director Hani Aman said at the time that his firm would be represented by two members on UTC’s board of directors.

The acquisition was part of the Philip Morris subsidiary’s agreement with Eastern Co. to locally manufacture cigarettes. UTC was the only company to bid in last year’s tender after other companies complained that the conditions of the tender would establish a monopoly over the local market.

Philip Morris confirmed its full commitment to all existing contractual relationships with traders and suppliers to guarantee the availability of its products across Egypt’s governorates. The company said it will continue to provide all of its products at the same prices as recently officially set with no change to the packaging.

Aman said that the Eastern Co. is trying to absorb the rise in production costs internally, resulting from the recent rise in the cost of raw materials.

He pointed out that the disruption of supply chains had a direct impact on the rise of some production inputs, in addition to the impact of the rise in the price of the U.S. dollar on other products.

Eastern Co.’s tobacco business reported revenues of EGP12.78 billion for the first nine months of fiscal year 2021-2022, up 5 percent over those of the comparable period in the previous year.