CAIRO: Egyptian garment maker Arafa Holding plans to buy back up to 5 percent of its shares to support its share price, the firm said on Wednesday. The 5 percent would have a market value of about $11.5 million at current prices. Shares in Arafa hit a year low of $0.93 before bouncing back to close at $0.95, down from a year high of $1.82 set in March. Arafa did not say when the share buyback would take place. The company recently reported an increase in net profit by 23.8 percent to reach $30.0 million in fiscal year 2007/08, up from $24.2 million in the previous year. Revenues grew 3.9 percent to reach $303.8 million in fiscal year 2007/08, up from $292.4 million the previous year. Investment firm Beltone Financial had expected the top-line figure to suffer slightly from the direct effect of the slowdown in the UK retail market, as 84.4 percent of Arafa's retail sales are derived from the UK. Inter-company sales increased by 29.6 percent to reach $42.4 million and represented 11.9 percent of total sales in fiscal year 2007/08, versus $32.7 million and 9.8 percent of total sales the previous year. "Inter-company sales are the key driver for Arafa's future margin growth, capitalizing on the vertical integration between the three business segments, namely retail, Apparel and Tailoring (A&T) and textile, said Beltone. Arafa said last month it had begun exclusive due diligence to buy a license to sell formal wear by French designer Pierre Cardin. It has already acquired the licenses to sell Pierre Cardin men s sportswear, casual wear and formal shirts. Arafa said earlier this year it was seeking to spend at least $300 million to buy men s clothing brands in Italy or Germany. The firm, which also owns 60 percent of British Menswear Brands, made a net profit of $30 million in the year to March 31, up 24 percent from the previous year. -Additional reporting by Reuters.
