AMMAN -- Middle East Complex for Engineering Electronics & Heavy Industries (MECE) saw its sales up by 15.5 per cent and operational profit by 22.5 per cent last year but net profit was down by 55 per cent.
According to the company's 12th annual report, sales went up from JD101.49 million in 2005 to JD117.31 million in 2006 and operational profit rose from JD14.75 million to JD17.9 million.
The sharp drop in net profit was mainly the result of a major decline in extraordinary gains from selling subsidiary companies in 2006; as such sales brought in only JD1.25 million compared to JD14.33 million in 2005.
Other factors included losses from selling and re-evaluating financial assets for trading and losses posted by affiliate companies.
Financing costs were another heavy burden on the company amounting to JD6.36 million last year compared to JD5.88 million in 2005.
The balance sheet as of December 31, 2006, showed total liabilities at JD115.29 million. Of this amount, JD27.33 million were in short-term bank loans, JD7.02 million in long-term bank loans, JD8.52 million in corporate bonds due within one year, JD19.88 million in corporate bonds due in 2007, 2008 and 2009, JD14.2 million in commercial paper in addition in JD7.93 million in bank credit.
The remaining amount comprised various payables, postdated cheques and bills payable.
In 2005, liabilities totalled JD200.55 million, of which, JD83.51 million represented payments for raising the company's capital.
Shareholders equity totaled JD161.96 million in which capital amounted to JD93.93 million compared to JD40 million in 2005. Issuance premiums, reserves and retained earnings were JD33.13 million, 11.8 million and JD27.05 million respectively. In 2005, total shareholders' equity stood at JD72.30 million.
Current assets totalled JD197.78 million consisting mainly of cash and cheques at hand and at banks, inventory and goods in transit, receivables and cheques under collection and financial assets for trading at fair value.
Other assets, including net fixed assets, projects under implementation and payments for investing in companies' shares, brought up the total assets to JD287.8 million. In 2005, total assets stood at JD280.83 million.
Despite the lower profit, the company will begin distributing cash dividends to shareholders on June 15. The JD10 million in cash dividends will be at a rate of 10 per cent.
MECE, a well-known company manufacturing and trading electric and electronic home appliance, has several factories.
The first factory was established in King Abdullah Industrial City-Sahab in 1994. This factory specialises in manufacturing LG home appliances to the local and regional markets.
In 2002, MECE established an industrial complex in the Dhuhaiba village/Al Mwaqar on 210,000 square metres of land. It specialises in manufacturing electric and electronic home appliances.
The complex is distinguished in having factories for white goods, electronic appliances, plastic injection, polystyrene and carton, thus providing facilities for a fully integrated manufacturing operation.
The range of home appliances produced and distributed by MECE includes consumer electronics goods, such as televisions, DVDS, audio, LCD and electrical' goods, such as refrigerators, washing machines, air-conditioning units, microwave ovens, vacuum cleaners and other small appliances, such as gas heaters and electric cookers. MECE has also acquired RUM-Aladdin Company which owns a factory that specialises in home appliances, heating systems and gas stoves.
Acquiring such a factory, which is located in King Abdullah Industrial City/ Sahab, represents a further step by MECE towards the completion of a cycle of home appliance manufacturing.
The company claims over 75 per cent of Jordan's market share. It has an integrated distribution channel consisting of 45 outlets in Jordan, of which 30 are in Amman, and the rest are spread all over the Kingdom.
The local distribution of LG products are carried out by MECE's affiliate and marketing arm Darwish Al Khalili &Sons Company. The distribution of Haeir and Daewoo products are handled by MECE's subsidiary and marketing arm South Electronics Company.
MECE exports its products to many Arab countries such as Syria, Palestine, Iraq, Lebanon, Sudan, Egypt, Libya and Morocco through main agents (Daewoo agents in the Gulf countries) within several contracts and deals.
The annual report pointed out that the company has started to set up marketing firms in Egypt, Syria, Lebanon and Morocco besides starting to establish an LCD production line in Jordan.
At 25 per cent, Syria topped the list of main buyer countries on which MECE relies, followed by Iraq at 14 per cent. Lebanon and Egypt accounted for 8 per cent each.
"MECE started to enter European markets after receiving the German certificate for safety and specifications and being able to put the CE label on its products," the annual report said.
In 2005, MECE entered into a joint venture agreement with Emirates International Investment Company, UAE (EIIC Group) to implement a new project in Abu Dhabi, the United Arab Emirates (UAE), with a total project cost of about JD142 million ($200 million). MECE is expected to contribute 40 per cent of the new company's equity, named National Industrial Complex (NIC). MEC is also expected to retain management control of the new venture.
Recently, UAE's Al Mal Capital bought 10 per cent equity in MECE bringing the total stakes of UAE firms to 22 per cent.
Besides those mentioned, MECE has several interests in other companies handling investments, real estate, mobile trading, customs clearing, maintenance, electronic services, air-conditioning and general trading.
MECE employed 1,582 workers at the end of 2006. Its main shareholders are: Osama Darwish Mustafa Al Khalili (13.25 per cent), Darwish Mustafa Darwish Al Khalili (6.73 per cent), Ayman "Mohammad Darwish" Al Khalili (11.8 per cent) and International Investment Company (9.91 per cent).
By Samir Ghawi
© Jordan Times 2007
