Last checked at 3 Jul 2008 07:00
AL EZZ STEEL REBARS REPORTS CONSOLIDATED Q1 2008 RESULTS
Cairo, 3 July 2008 - Al Ezz Steel Rebars S.A.E. ("ezzsteel") (CASE: ESRS; London Stock Exchange: AEZD), the largest independent producer of steel in the MENA region and market leader in Egypt, today announced its consolidated Q1 results for the period ending 31 March 2008. The audited results have been prepared in accordance with Egyptian Accounting Standards.
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Key highlights
| EGP | Q1 2007 | Q1 2008 | YoY+/- |
| Net sales | 3.7bn | 5.0bn | +35% |
| Gross profit | 900m | 1.3bn | +44% |
| EBITDA* | 980m | 1.3bn | +32% |
| Net profit before tax | 656m | 1.0bn | +52% |
| Tax and deferred tax | 133m | 196m | +47% |
| Net profit after tax and minority interests | 279m | 436m | +56% |
| EPS on a weighted average number of shares | 1.55 | 2.44 | +57% |
| Net debt to Equity | 1.09 | 0.74 | -32% |
*EBITDA = sales - cost of goods sold - selling & marketing expense - G&A expense + depreciation and amortisation
Commenting on the results, Mr Paul Chekaiban, Managing Director said:
"We are very satisfied with our performance over the last quarter, with our strong growth driven by the global increase in steel prices as well as our own strong operating performance. We have continued to achieve further production efficiencies and continue to invest in our plants to ensure they meet the highest global standards."
Operational Review
Sales
All of the below financial breakdowns are based on ezzsteel's consolidated financials which include 3 months financial performance of ezzsteel (ESR/ESM), EZDK and EFS.
| Sales | Q1 2007 | Q1 2008 | YoY Change |
| EGP Mn | |||
| Long | 2,461 | 3,046 | 24% |
| Flat | 1,232 | 1,948 | 58% |
| Others | 34 | 48 | 41% |
| Total | 3,727 | 5,043 | 35% |
Consolidated net sales for Q1 2008 were EGP 5.0 billion compared with EGP 3.7 billion during Q1 2007, representing an increase of 35 per cent. Long steel products accounted for 60 per cent of total sales and flat steel products represented 39 per cent of sales in Q1 2008.
The contributions of ezzsteel, EZDK and EFS to net sales for the period ending 31 March 2008 were 25 per cent, 55 per cent, and 20 per cent respectively.
Exports
The Egyptian market remains the focus for sales of long products while flat sales were mainly directed towards international markets, as illustrated below:
| EGP Mn | Domestic | per cent | Export | per cent |
| Long | 2,951 | 97% | 95 | 3% |
| Flat | 745 | 38% | 1,204 | 62% |
Flat product exports accounted for 62 per cent of total Flat sales, an increase from the 57 per cent that took place in Q1 2007
Long product exports accounted for 3 per cent of total Long sales, a decline from the 13 per cent that took place in Q1 2007, this resulted from the Company's commitment to supply demand in the local market as a priority.
Production
Long products production for Q1 2008 was 774,736 tons compared with 772,361 during Q1 2007, representing a slight year on year increase. ESR/ESM production saw a drop of 8% during the quarter this was due to a planned shutdown at the 10th of Ramadan facility for a period of one month to install a new automation system for the production lines.
Flat products production for Q1 2008 was 461,041 tons compared with 370,731 tons during Q1 2007, representing an increase of 24% per cent. EZDK flat products production increased by 57% over the same period in 2007, this is mainly attributable to a drop in the Q1 2007 production levels that had resulted from a failure in the electricity transformer feeding the flat products plant.
Cost of Goods Sold
The Consolidated Cost of Goods Sold for Q1 2008 stood at 74 per cent of Sales, representing a two per cent improvement in the COGS/Sales ratio that was 76 percent during Q1 2007.
Gross profit
Gross profit of EGP1.3bn in Q1 2008 increased by 44% over the EGP 0.9bn recorded in Q1 2007, driven by the normalisation of flat steel production during the period as well as an improvement in the cost-revenue relationship resulting from higher global steel pricing since the beginning of the year.
EBITDA
EBITDA for the period reached EGP 1.3 billion, up from EGP 980 million for the same period in 2007 reflecting a 32% growth.
At ezzsteel, EBITDA is calculated as follows: Sales - cost of goods sold - selling & marketing expenses - G&A expenses + Depreciation and amortization.
Tax and deferred tax
The corporate tax rate for Egyptian companies is 20 per cent of net income. Tax and deferred tax reached EGP 196 million in Q1 2008, compared to EGP 133 million in Q1 2007, keeping ezzsteel as one of the largest corporate tax payers in Egypt.
Net profit after tax and minority interests
Net profit after minority interests was EGP 436 billion, up 56 per cent in comparison to the same period in 2007. This has delivered earnings per share (EPS) of EGP 2.44 in Q1 2008 versus EGP 1.55 per share in Q1 2007 on a weighted average number of shares basis.
Divisional Overview
| EZDK (Alexandria) Sales: | Q1 2007 | Q1 2008 | % change |
| Value: | EGP 2.1 bn | EGP 2.8 bn | +33% |
| Volume: Long: Flat: | 473,517 tonnes 175,941 tonnes | 462,137 tonnes 249,577 tonnes | -3% +42% |
| Exports as % of Sales: Long: Flat: | 19% 41% | 4% 43% | |
| EBITDA: | EGP 800 m | EGP 1.2 bn | +50% |
| Production: | |||
| Long Products: | 432,600 tonnes | 462,492 tonnes | +7% |
| Flat Products: | 147,951 tonnes | 232,985 tonnes | +57% |
| Billets: | 457,061 tonnes | 493,100 tonnes | +8% |
| ESR/ESM (Sadat City & 10th of Ramadan City) Sales: | Q1 2007 | Q1 2008 | % change |
| Value: | EGP 1.1 bn | EGP 1.3 bn | +18% |
| Volume: | 353,008 tonnes | 320,750 tonnes | -9% |
| Exports as % of Sales: | 7% | 1% | |
| EBITDA: | EGP 110 m | EGP 117 m | +9% |
| Production: | |||
| Long Products: | 339,761 tonnes | 312,244 tonnes | -8% |
| Billets: | 208,037 tonnes | 196,814 tonnes | -5% |
| EFS (Suez) Sales: | Q1 2007 | Q1 2008 | % change |
| Value: | EGP 700 m | EGP 1.0 bn | +43% |
| Volume: | 213,897 tonnes | 253,300 tonnes | +18% |
| Exports as % of Sales: | 72% | 80% | |
| EBITDA: | EGP 75 m | EGP 79 m | +4% |
| Production: | |||
| Flat Products: | 222,780 tonnes | 228,056 tonnes | +2% |
- Ends -
For further information:
| Ezz Steel | Tel | Mobile |
| Kamel Galal | + 20 2 3762 2144 | + 20 10 539 5499 |
| Capital MS&L | ||
| Claire Maloney | +44 207 307 5341 | + 44 7770 958 479 |
| Jennifer Martin | + 44 20 7307 5335 | + 44 7841 401304 |
About Al-Ezz Steel Rebars Co. S.A.E.
Al Ezz Steel Rebars (ezzsteel) is the largest independent steel producer in the Middle East and North Africa, with a total actual capacity of 5.3 million tonnes of finished steel per annum in 2007. It is the Egyptian market leader with over 65 per cent market share in terms of sales.
In 2007, the Company produced 3.1 million tonnes of long products (typically used in construction) and 1.7 million tonnes of flat products (typically used in consumer / industrial goods). ezzsteel's customer base is geographically diversified, with flat products mainly directed to export markets, whereas long products are sold in the domestic market. More than 70 per cent of its plants are less than 10 years old using the latest in modern steel making technology.
Disclaimer:
This press release is issued by Al Ezz Steel Rebars S.A.E. ("ezzsteel" or the "Company"), in connection with the disclosure of the Company's financials results for the year 2007. This document includes forward-looking statements. These forward-looking statements include all matters that are not historical facts. In particular, the statements regarding the Company's strategy, the expected strength of demand for long products in Egypt and in regional markets and for flat steel in the international markets, and other future events or prospects are forward-looking statements. Recipients of this document should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors that are in many cases beyond the control of the Company. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance and the Company's actual results of operations, financial condition and liquidity, and the development of the industry in which the Company operates may differ materially from those made in or suggested by the forward-looking statements contained in this document. The cautionary statements set forth above should be considered in connection with any subsequent written or oral forward-looking statements that the Company, or persons acting on its behalf, may issue. Various factors could cause actual results to differ materially from those expressed or implied by the forward-looking statements in this document including worldwide economic trends, global and regional trends in the steel industry, the economic and political climate of Egypt and the Middle East and changes in business strategy of the Company and various other factors. These forward-looking statements reflect the Company's judgment at the date of this document and are not intended to give any assurances as to future results. The Company undertakes no obligation to update these forward-looking statements, and it will not publicly release any revisions it may make to these forward-looking statements that may result from events or circumstances arising after the date of this document. None of ezzsteel, or any of its directors, officers or employees or any other person can give any assurance regarding the future accuracy of the information set forth herein or as to the actual occurrence of any predicted developments nor shall assume, and each of ezzsteel, any of its directors, officers or employees or any other person expressly disclaims, any obligation, except as required by law, the listing rules of the CASE or the LSE or the FSA, to update any forward-looking statements or to conform these forward-looking statements to ezzsteel's actual results.
By accepting any copy of this document, you agree to be bound by the foregoing limitations and restrictions.