Al Ezz Gds Regs Regulatory News (AEZD)

ezzsteel REPORTS CONSOLIDATED FULL YEAR 2010 RESULTS

Cairo, 9 August 2011 - ezzsteel (formerly: Al Ezz Steel Rebars S.A.E.) (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 full year results for the period ending 31 December 2010. The audited results have been prepared in accordance with Egyptian Accounting Standards.

Key highlights

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

Comment

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

"After a challenging 2009, ezzsteel has performed strongly in 2010. Our vertically integrated and flexible model has ensured improved profitability and mitigated the effects of volatility in global steel prices and demand during the period under review. 2010 marked an all time record for ezzsteel in terms of annual production volumes; this was assisted by EFS returning to production at the start of Q2 2010.

"Understandably, in early 2011, we have seen some minor production disruptions which have slowed production volumes. However, during the first six months of 2011 we have still delivered higher steel product volumes than during the same period in 2010.

"We are confident that ezzsteel's business model, together with the expansion projects which are already progressing, will once again deliver even more compelling results when the Egyptian economy recovers and a more stable political environment returns."

For further information:

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, and the Egyptian market leader, with a total actual capacity of 5.8 million tonnes of finished steel.

In 2010, the Company produced 3.4 million tonnes of long products (typically used in construction) and 1.5 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 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 2010 were EGP 16.6 billion compared with EGP 12.6 billion during 2009, representing an increase of 32 per cent. This increase in sales has been the result of increased volumes with EFS returning to production from the second quarter of 2010.

ezzsteel's exposure to the weaker global steel market is primarily through its flat steel products, with long steel products primarily directed to serving the buoyant domestic market.

Long steel sales volume reached 3,393 thousand tonnes during 2010, which represents a 4 per cent increase over the 3,257 thousand tonnes sold during 2009. This increase over the previous year was to meet strong domestic demand for long products. Flat steel sales volumes also increased to 1,305 thousand tonnes in 2010 from 1,016 thousand tonnes in 2009, a rise of 28 per cent year-on year. This was due to the reopening of the EFS production facility in April 2010.

Long steel products were 70 per cent of total sales in 2010, accounting for EGP 11,577 million, while flat steel products represented 30 per cent of sales at EGP 4,834 million. Long product exports accounted for only 2 per cent of total long sales, due to the continued strength of domestic market demand for long products in 2010. Conversely, flat product exports accounted for 58 per cent of total flat sales, primarily for exports.

Long steel production volume reached 3,411 thousand tonnes during 2010 representing a 4 per cent increase over the 3,287 thousand tonnes produced during 2009. Flat steel production volumes were 49 per cent higher at 1,461 thousand tonnes in 2010 compared to 979 tonnes in 2009, again due to the restart of production at EFS.

On a plant basis, ESR/ERM long steel production rose by 6 per cent year-on-year in comparison with 2009 to 1,563 thousand tonnes. EZDK long production rose by 2 per cent over the same period at 1,848 thousand tonnes and flat production by 4 per cent at 1,015 tonnes. Flat production at EFS was substantially increased at 445,649 tonnes, up from just 1,228 tonnes for the previous year when it was shutdown. Billet production at EFS has also started during Q3 2010, producing 211 thousand tonnes in Q4 2010.

The contributions of ESR/ERM, EZDK and EFS to the consolidated net sales for the period ending 31 December 2010 were 32 per cent, 60 per cent, and 8 per cent respectively.

Cost of Goods Sold

Consolidated cost of goods sold for the year ended 31 December 2010 represented 88 per cent of sales, and remains the same as during the preceding year.

Gross profit

Gross profit of EGP 1,924 million was recorded in 2010, an increase of 32 per cent from the EGP 1,454 million recorded in the same period in 2009.

EBITDA

EBITDA for the period reached EGP 2,111 million, up from EGP 1,643 million for 2009 representing an increase of 29 per cent over the previous year.

Net profit after tax and minority interests

For the year ending 31 December 2010, net profit after tax and minority interests was EGP 252 million, an increase of 186 per cent compared to the EGP 88 million reported for 2009.

Liquidity and capital resources

At the end of the period, ezzsteel had cash on hand of EGP 1.4 billion and net debt of EGP 8.4 billion. The company has gearing of Net Debt / Equity 1.29 times.

Outlook

Understandably, in early 2011, we have seen some minor production disruptions which have slowed production volumes. However, during the first six months of 2011 we have still delivered higher steel product volumes than during the same period in 2010.

As previously announced, ezzsteel has reorganized its Board of Directors following the resignation of Ahmed Ezz from his position as Chairman and appointed Paul Chekaiban as Chairman and Managing Director.

Due to the momentous events that have been taking place in Egypt since the beginning of the year, we have encountered delays in the construction of our new DRI project. The banks financing the project are providing the required funds in order to finalise the construction and we expect that the project will be operational during the second half of next year.

Divisional Overview

- Ends -

Disclaimer:

This press release is issued by Ezzsteel (formerly: Al Ezz Steel Rebars S.A.E.) the "Company", in connection with the disclosure of the Company's financial results for the 12 month period ending 31 December 2010. 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.