Table of Contents
Key Points:
- Raya Electric has partnered with LG Electronics to manufacture LG-branded air conditioners in Egypt, enhancing local production capabilities.
- Over EGP 350 million ($7.2 million) invested in a high-tech facility capable of producing 300,000 units annually, emphasizing local component use.
- The partnership aims to meet domestic demands and boost exports, aligning with Egypt’s strategy to strengthen local manufacturing.
Raya Electric, a subsidiary of Raya Holding for Financial Investment led by tycoon Medhat Khalil, has partnered with LG Electronics.
Together, they aim to produce LG-branded home air conditioners in Egypt. This marks a significant development in the region’s home appliances sector, adopting a ‘manufacturing as a service’ (MaaS) business model.
Innovative design and local production
Raya Electric will not only assemble but also design air conditioners. They are committing to using over 60 percent locally sourced components.
This initiative aligns with the Egyptian government’s effort to increase local manufacturing content while adhering to international standards.
The company has invested over EGP 350 million ($7.2 million) to enhance its research, development, and manufacturing capabilities.
The factory, located in 6th of October City, spans 20,000 square meters and boasts state-of-the-art technology. It can produce up to 300,000 units annually and holds multiple international certifications.
Expanding capabilities and market reach
Over the next three years, LG plans to utilize Raya Electric’s facilities to produce more than 150,000 units annually. This will not only satisfy the rising domestic demand but also support exports to other regional markets. This strategy supports the Egyptian government’s vision to boost local manufacturing.
Usama Zaki, CEO of Raya Electric, said, “LG’s choice of Raya Electric as a manufacturing partner highlights our robust capabilities.” He emphasized that this partnership allows them to use their Original Design Manufacturing (ODM) platform, which meets strict local and international standards.
Billy Kim, Chairman of LG Egypt, mentioned that the partnership supports LG’s strategy to encourage local manufacturing. He noted, “This marks a continuation of LG’s thirty-year commitment to the Egyptian market.”
This collaboration not only strengtto boost air conditioner manufacturing in Egypthens Raya Holding’s market position but also significantly contributes to the Egyptian economy. Following this partnership, Raya Holding reported a substantial increase in its consolidated net profit, reaching EGP 330.95 million (6 million) in the first quarter of 2024.
Raya Holding: Major player in Egypt’s investment scene
Established in 1999 through a merger, Raya Holding has become a player in Egypt’s investment scene under Medhat Khalil’s leadership. Khalil has reduced his holdings from a majority stake of 58.1 percent in December 2022 to 17.67 percent as of this report.
The group delivered a record financial performance in 2023, with revenue increasing by 53.31 percent to EGP 31.29 billion ($650 million), partly due to a rise in foreign currency-denominated revenues, which delivered 24 percent of Raya’s total revenue stream.
