Last checked at 4 Jun 2009 07:00
AL EZZ STEEL REBARS REPORTS CONSOLIDATED Q1 2009 RESULTS
Cairo, 4 June 2009 - Al Ezz Steel Rebars S.A.E. ("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 Q1 results for the period ending 31 March 2009. 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/3334T_-2009-6-3.pdf
Key highlights
| EGP | Q1 2008 | Q1 2009 | YoY+/- |
| Net sales | 5.0bn | 3.4bn | -33% |
| Gross profit | 1.3bn | 324mn | -75% |
| EBITDA* | 1.3bn | 378mn | -71% |
| Net profit before tax | 1.0bn | 162mn | -84% |
| Tax and deferred tax | 196mn | 42mn | -79% |
| Net profit after tax and minority interests | 436mn | 66mn | -85% |
| Number of shares (at end of period)** | 182mn | 543mn | |
| EPS (on number of shares at end of period) | 2.39 | 0.12 | |
| Net debt to Equity | 0.74x | 0.70x |
*EBITDA = sales - cost of goods sold - selling & marketing expense - G&A expense + depreciation and amortisation
** increase in shares on due to rights issue in September 2008
Comment
Commenting on the results, Mr Paul Chekaiban, Managing Director of ezzsteel, said:
"Unlike most of its peers in the steel industry, ezzsteel was able to operate profitably during the first quarter of 2009.
"Although the financial performance has been heavily impacted by the fall in steel prices and the weakness of the export markets, we continued to enjoy sustained demand on our steel products in the domestic market.
"ezzsteel remains committed to pursuing its growth strategy in order to further enhance its solid position in the steel industry."
For further information:
| Ezz Steel | Tel | Mobile |
| Kamel Galal | + 20 2 3762 2144 | + 20 10 539 5499 |
| Capital MS&L | ||
| Nick Bastin | + 44 20 7255 5117 | + 44 7931 500 066 |
| Jennifer Martin | + 44 20 7307 5335 | + 44 7841 401 304 |
About Al-Ezz Steel Rebars Co. S.A.E.
Al Ezz Steel Rebars (ezzsteel) is the largest steel producer in the Middle East and North Africa, and the Egyptian market leader, with a total actual capacity of 5.3 million tonnes of finished steel.
In 2008, the Company produced 3.2 million tonnes of long products (typically used in construction) and 1.4 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/ESM, EZDK and EFS.
Sales & Production
Consolidated net sales for the first quarter of 2009 were EGP 3.4 billion compared with EGP 5.0 billion during the first quarter of 2008, representing a decline of 33 per cent. This lower level of sales has resulted from lower steel prices, the prevailing weakness in the flat steel market and the shutdown at EFS.
Long steel sales volume reached 847 thousand tonnes during the first quarter of 2009, which represents an 8 per cent increase over the 782 thousand tonnes sold during the same period in 2008. Flat steel volumes on the other hand witnessed a sharp decline from 503 thousand tonnes in the first quarter of 2008 to 209 thousand tonnes in the first quarter of 2009. This was mainly due to the shutdown of the EFS production facility.
Long steel products accounted for 81 per cent of total sales in the first quarter of 2009, in comparison to 60 per cent for the first quarter of 2008, while flat steel products represented 18 per cent of sales in the first quarter of 2009. Long product exports accounted for less than one per cent of total long sales, due to the continued strength of the domestic market demand for long products.
Long steel production volume reached 835 thousand tonnes during the first quarter of 2009 representing an 8 per cent increase over the 775 thousand tonnes produced during the same period in 2008. Flat steel production volumes on the other hand were 55 per cent lower at 207 thousand tonnes in the first quarter of 2009.
ESR/ESM long steel production rose by 17% during the quarter, while EZDK long steel production was up by two percent over the same period. Flat production at EZDK was down 11% in the first quarter of 2009, as a result of the prevailing weakness in the flat steel market. While EFS remained idle during the quarter.
The contributions of ESR/ESM, EZDK and EFS to net sales for the period ending 31 March 2009 were 34 per cent, 65 per cent, and 0.3 per cent respectively.
| Sales | ESR/ESM | EZDK | EFS | Total |
| EGP Mn | ||||
| Long | 1,176 | 1,571 | 2,747 | |
| Flat | 623 | 8 | 631 | |
| Others | 32 | 2 | 34 | |
| Total | 1,176 | 2,225 | 10 | 3,411 |
ezzsteel's exposure to the global steel market is primarily through its flat steel products, with long steel products primarily directed to serving the buoyant domestic market.
| EGP Mn | Domestic | per cent | Export | per cent |
| Long | 2,731 | 99% | 15 | 1% |
| Flat | 324 | 51% | 307 | 49% |
Cost of Goods Sold
Consolidated cost of goods sold for the quarter ended 31 March 2009 represented 90 per cent of sales, compared to 74 per cent in the first quarter of 2008. This figure was largely impacted by the proportionally higher costs at EZDK and the shutdown in production at EFS during the quarter.
Standalone figures:
| EGP Mn | ESR/ESM | EZDK | EFS | The Company |
| Sales | 1176 | 2235 | 151 | 3,411 |
| COGS | 1051 | 1930 | 256 | 3,088 |
| COGS/Sales | 89 per cent | 86 per cent | N/A | 90 per cent |
Gross profit
Gross profit of EGP 324 million was recorded in Q1 2009, a 75% decline from the EGP 1.3bn recorded in the first quarter of 2008. Lower profits were largely a result of some margin compression resulting from lower global steel pricing since the last quarter of 2008, as well as the continued weakness in the flat steel market, and production curtailment.
EBITDA
EBITDA for the period reached EGP 378 million, down from EGP 1.3 billion for the same period in 2008 representing a decrease of 72 per cent.
Net profit after tax and minority interests
For the three months to 31 March 2009, net profit after tax and minority interests was EGP 66 million, down from EGP 436 million in the first quarter of 2008.
Liquidity and capital resources
At the end of the period, ezzsteel had cash on hand of EGP 2.5 billion and net debt of EGP 4.3 billion. The company has a conservative level of gearing of Net Debt / Equity of 0.70 times.
Outlook
ezzsteel remains confident about the continued strength of the Egyptian market. The structural elements of the Egyptian economy continue to remain solid and long product demand is expected to remain on track for the rest of 2009 owing to the resilience of the private housing market and real estate projects and the impetus from the infrastructure schemes.
Conditions remain weak in the global flat steel market and as a result production at EFS is not expected to resume in the first half of 2009.
While conditions in the global steel industry remain very challenging for most participants, ezzsteel remains well positioned and committed to its growth strategy.
Divisional Overview
| EZDK Performance Sales (EGP): | Q1 2008 | Q1 2009 | |
| Value: | 2.8 | 2.2 | bn |
| Volume: Long: Flat: | 462,137 249,577 | 488,218 204,453 | Tonnes |
| Exports as % of Sales: Long: Flat: | 4% 43% | 1% 53% | |
| EBITDA: | EGP 1.1 | 0.3 | bn |
| Production: | |||
| Long Products: | 462,492 | 469,707 | Tonnes |
| Flat Products: | 232,985 | 207,001 | Tonnes |
| Billets: | 493,100 | 496,175 | Tonnes |
| ESR/ESM Performance Sales (EGP): | Q1 2008 | Q1 2009 | |
| Value: | 1.3 | 1.2 | BN |
| Volume: | 320,626 | 361,427 | Tonnes |
| Exports as % of Sales: | 2% | 0% | |
| EBITDA: | 117 | 112 | MN |
| Production: | |||
| Long Products: | 312,244 | 365,545 | Tonnes |
| Billets: | 196,814 | 211,582 | Tonnes |
| EFS (Suez) Sales (EGP): | Q1 2008 | Q1 2009 | |
| Value: | 1.0 | 0.2 | BN |
| Volume: | 253,300 | 4,237 | Tonnes |
| Exports as % of Sales: | 80% | 97% | |
| EBITDA: | 78 | -74 | MN |
| Production: | |||
| Flat Products: | 228,056 | 0 | Tonnes |
- Ends -
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 three months to 31 March 2009. 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.