Carpet maker has rug pulled from under it

Europe's worsening debt crisis is building up a pile of problems for the world's biggest carpet maker.

Egypt's Oriental Weavers Carpethas reported a 23 per cent decline in nine-month profit amid soaring raw material prices.

Net income for the year to September 30 reached 185.5 million Egyptian pounds, compared with 241.8m pounds in the same period a year earlier, the company said in a statement to the Egyptian Exchange.

Oil trading at above US$110 a barrel on average during the third quarter eroded the company's margins. Oriental Weavers utilises a number of oil-based raw materials in its manufacturing processes. These account for approximately 55 per cent of the total cost of production.

Polypropylene used in the production of synthetic fibres is the major raw material used by the company and comprises between 25 and 30 per cent of the cost of production.

Plastics and other packaging materials manufactured from oil derivatives form an additional 25 per cent of the cost base.

Oriental is the world's largest producer of machine-woven carpets and rugs, with an annual production capacity of 110 million square metres. The company, based in Cairo, is by far the market leader in Egypt, with close to an 85 per cent market share.