Al Ezz Gds Regs Regulatory News (AEZD)

ezzsteel REPORTS CONSOLIDATED 9M2012 RESULTS

Cairo, 28 February 2013 - ezzsteel (EGX: ESRS; London Stock Exchange: AEZD), the largest independent producer of steel in the MENA region and market leader in Egypt, today announced its consolidated results for the period ending 30 September 2012. The audited results have been prepared in accordance with Egyptian Accounting Standards.

Paste the following link into your web browser to download a PDF of the full financial statements related to this announcement:

http://www.rns-pdf.londonstockexchange.com/rns/8465Y_-2013-2-27.pdf

Key highlights

*EBITDA = sales - cost of goods sold - selling & marketing expense - G&A expense + depreciation and amortisation

** EPS = Net profit after tax & Minority Interest / No. of shares at the end of the period 

Comment

Commenting on the results, Mr Paul Chekaiban, Chairman and Managing Director of ezzsteel, said:

"During the third quarter of 2012 ezzsteel had to face three major negative factors: first, the deepening of the recession in the global steel sector, second, the ongoing deterioration of the Egyptian economy, and third, the slowdown in the local steel market due to the seasonal effect of summer and Ramadan holidays.

"Nevertheless, the cumulative results for the first nine months of 2012, though slightly negative, remain largely balanced compared to the performance of our international and regional peers.

"As soon as the detrimental external factors ease, ezzsteel's outstanding operational efficiency will once again translate into positive margins and an improved bottom line."

For further information:

ezzsteel

About ezzsteel

ezzsteel (formerly: Al Ezz Steel Rebars) is the largest independent steel producer in the Middle East and North Africa, and the Egyptian market leader, with a total actual capacity of 5.8million tonnes of finished steel.

In 2011, the Company produced 3.6 million tonnes of long products (typically used in construction) and 1million 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 50 per cent of its plants are less than 10 years old, using the latest in modern steel making technology.

Operational Review

All of the below financial breakdowns are based on ezzsteel's consolidated financials, which include the financial performance of ESR/ERM, EZDK and EFS.

Sales & Production

Consolidated net sales for 9M 2012 were EGP 14.8billion, representing an increase of 5per cent year on year. This increase in sales reflects higher production from EFS following commercial operation of the long product mill during 2012. Long product prices fell by 1 per cent year on year in the local market, while flat steel prices were stable in the local market, export prices fell by6per cent, reflecting the broader weakness in international steel markets.

Long steel products accounted for EGP 11.7 billion or 79 per cent of sales in 9M 2012, while flat steel products represented 20 per cent of sales at EGP 2.9 billion. Long product exports accounted for 4 per cent of total long sales value, due to the continued robust domestic market demand for ezzsteel's long products, mainly from private house building activity. Flat product exports accounted for 47 per cent of total flat sales value, with the domestic market continuing to see reasonable demand in contrast due to the reduced activity in the global flat steel market.

Long steel sales volumes reached 2.8 million tonnes during9M 2012, 4per cent higher than the 2.7* million tonnes sold during the same period last year, driven by long product production coming on stream at EFS.

Flat steel sales volumes fell by 15 per cent to 697 thousand tonnes in 9M2012, principally due to the switching of production at EFS to long products, due to higher local demand and more attractive pricing.

The group's consolidated sales volume reached a total of 3.5 million tonnes in 9M 2012, an increase of 1 per cent from the 3.5* million tonnes sold in 9M 2011, due to increased long product production at EFS following the commissioning of the long product mill.

The contributions of ESR/ERM, EZDK and EFS to the consolidated net sales for the period ending 30 September 2012 were 27 per cent, 59 per cent, and 14 per cent respectively.

Long steel production volumes reached 2.9 million tonnes during the period, a 13 per cent increase from the 2.6million tonnes in 9M 2011, reflecting increased production from EFS. Flat steel production volumes fell by 13 per cent to 683 thousand tonnes for the period, compared to 788 thousand tonnes in 9M 2011. This was due to the suspension of flat production at EFS due to weaker global demand and pricing and the concentration of production at that plant on long products.

* Note 9M 2011 tonnage includes 187 thousand tonnes ofpre-commissioning long products sales made by EFS's new rolling mills during that period

Cost of Goods Sold

Consolidated Cost of Goods Sold for 9M 2012 represented 92 per cent of sales, reflecting higher raw material costs, which increased by 6 per cent, and higher energy costs (gas and electricity), which grew by 30 per cent.

EFS's Cost of Goods Sold, at 108per cent, reflects the impact of the continued suspension of flat production and associated commissioning of the long product mill.

Gross profit

Gross profit of EGP1.2 billion was recorded in 9M 2012, a decrease of 27 per cent from the EGP1.7 billion in 9M 2011.

EBITDA

EBITDA for 9M 2012amounted to EGP1.4 billion, representing a decrease of 28 per cent from EGP 1.9 billion recorded in 9M 2011.

Tax

The company's tax charge fell from EGP443 million in 9M 2011 to EGP229 million in 9M 2012, mainly due to the tax rate that was increased during 2011 which included a one-time adjustment to the deferred tax liability that was fully accounted for during 2011.

Net profit after tax and minority interests

Net loss after tax and minority interests was EGP 46million for 9M2012, in comparison to a profit of EGP179 million for 9M 2011.

Liquidity and capital resources

At the end of the period, ezzsteel had cash on hand of EGP724 million and net debt of EGP8.6 billion. The company has gearing of Net Debt / Equity of 1.38times.

Outlook

Private house building still enjoys high single digit growth in Egypt, in contrast to weaker international steel markets. ezzsteel has maintained market share in its domestic market and has focused production from its EFS facility exclusively on long products to help meet this demand. Flat products pricing was also unusually weak, with long products currently commanding a premium, once again highlighting the need for a flexible asset portfolio that can adapt to evolving market conditions.

Divisional Overview

* As the long product sales made by EFS during the nine months 2011 were during the Commissioning Period of the plant, they are consequently capitalised within the total project cost in the balance sheet and not in the income statement

- Ends -

Disclaimer:

This press release is issued by ezzsteel (formerly: Al Ezz Steel RebarsS.A.E.)the "Company", in connection with the disclosure of the Company's financial results for the 9month period ending30 September 2012.This press release 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 and flat products in Egypt and in regional and 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 expressed in or implied 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 the 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, 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. Furthermore, none of such parties shall assume, and each of them expressly disclaims, any obligation (except as required by law or the rules of the ESE, the LSE or the FSA) to update any forward-looking statements or to conform these forward-looking statements to ezzsteel's actual results.