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Final Results

31 Mar 2016 07:00

RNS Number : 6248T
EZZ Steel Company - S.A.E.
31 March 2016
 

 

 

 

EZZSTEEL REPORTS CONSOLIDATED FY 2015 RESULTS

 

Cairo, 31 March 2016 - 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 31 December 2015. The audited results have been prepared in accordance with Egyptian Accounting Standards.

 

 

 

Key highlights  

EGP Million

FY 2014

FY2015

YoY % (+/-)

Net sales

19,398

16,641

-14

Gross profit

691

1,108

+61

EBITDA*

649

1,013

+56

Net profit before tax and minority interest

(862)

(721)

+16

Net profit after tax and minority interest

(697)

 (418)

+40

Earnings per share **

(1.28)

(0.77)

Net debt to equity

2.40

 2.64

 

*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:

 

"In 2015, ezzsteel registered a second consecutive year of negative performance. This was a direct consequence of two main factors: the ongoing crisis in the global steel sector; and the monetary turmoil in the Egyptian economy.

 

"There are preliminary signals of a slight improvement in international steel markets, and some promising signs of decisive monetary action by the Egyptian Authorities. These allow us to be more optimistic on a long term basis, although we expect short-term performance to remain as challenging as it has been for the past two years."

 

 

For further information:

ezzsteel

Kamel Galal

+20 2 3304 6060

+20 100 539 5499

Ashraf El Ghannam

+20 2 3304 6060

Ahmed Saad

 

Capital MSL

+20 2 3304 6060

Nick Bastin

+44 20 3219 8814

+44 7931 500 066

Charukie Dharmaratne

 

+44 20 3219 8837

 

+44 7908 638 573

 

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 5.8 million tonnes of finished steel.

 

In 2015, the Company produced 3.2 million tonnes of long products (typically used in construction) and 636,000 tonnes of flat products (typically used in consumer / industrial goods). ezzsteel deploys the latest in modern steel-making technology and is committed to further increasing vertical integration across its plants, boosting operational flexibility. 

 

 

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 FY 2015 were EGP 16.6 billion, representing a decrease of 14 per cent year on year. This decrease in sales was principally due to constant disruption of utilities, especially during the summer months. Despite this, quarterly sales grew by 11% between Q3 and Q4 2015, reflecting improving market conditions and a more stable situation in the utilities and gas market during the period.

Long product prices were down 3.3% and flat products were down 2.0% in the local market, while long export prices were down 18.7% and flat export prices were down 17.1%. 

 

Sales after elimination

EGPMn

ESR/ERM

EZDK

EFS

Consolidated

Long

5,334

7,482

1,057

13,873

Flat

2,600

2,600

Others

159

9

168

Total

5,334

10,241

1,066

16,641

 

Long steel products accounted for EGP 13.9 billion, or 83 per cent of sales in FY 2015, while flat steel products represented 16 per cent of sales at EGP 2.6 billion. Long product exports accounted for 1 per cent of total long sales. Flat product exports accounted for 30 per cent of total flat sales.

 

Sales Value

EGPMn

Domestic

per cent

Export

per cent

Long 13,674 99 199 1

Flat 1,814 70 786 30

 

Long sales volumes were 3.2 million tonnes during FY 2015, 8 per cent lower than the 3.44 million tonnes sold during the same period last year. During the period, the company took the strategic decision to maintain a relatively consistent market position, despite weaker pricing.

 

Flat sales volumes, which were concentrated at EZDK, fell by 23 per cent to 616,662 tonnes in FY 2015, due to lower production. Both the domestic and export market saw significant reductions in volumes, as weak international markets made sales of flat products unattractive.

 

The group's consolidated sales volumes totalled 3.8 million tonnes in FY 2015, a decrease of 10 per cent from the 4.2 million tonnes sold in FY 2014. 

 

The contributions of ESR/ERM, EZDK and EFS to the consolidated net sales for the period ending 31 December 2015 were 32 per cent, 62 per cent, and 6 per cent respectively.

 

Long steel production volumes totalled 3.2 million tonnes during FY 2015, down 10 per cent compared to FY 2014. Flat steel production volumes decreased by 19 per cent to 636,184 tonnes for the period, compared to 789,729 tonnes in the previous year.

 

Cost of Goods Sold

 

Consolidated Cost of Goods Sold for FY 2015 represented 93 per cent of sales, reflecting an increase in gross profit margin of 3 percentage points, from 4 per cent in FY 2014 to 7 per cent in FY 2015.

 

EFS's Cost of Goods Sold, at 134 per cent, reflected the low capacity utilization level currently at that facility, although long production was restarted in Q4 2015. At EZDK, the shortage of natural gas earlier in the year had impacted DRI production, forcing the company to use more expensive scrap and thereby suppressing margin. 

 

Standalone figures

Consolidated

EGPMn

ESR/ERM

EZDK

EFS

ezzsteel

Sales

5,668

10,644

1,145

16,641

COGS

 

5,011

 

9,820

 

1,536

 

15,533

 

COGS/Sales

88%

92%

134%

93%

 

 

Gross profit

 

Gross profit of EGP 1.1 billion was recorded for FY 2015, an increase of 60 per cent from the EGP 691 million recorded in FY 2014. 

 

EBITDA

 

EBITDA for FY 2015 amounted to EGP 1 billion, representing an increase of 56 per cent from EGP 649 million in FY 2014. 

 

Tax

 

During 2014, ezzsteel had a tax charge of EGP 7m and benefited from an additional deferred tax asset of EGP 186 million. 

 

 

Net result after tax and minority interests

 

Net result after tax and minority interests was a loss of EGP 418 million for FY 2015, in comparison to a loss of EGP 697 million for FY 2014. This was principally caused by the higher interest expense associated with the company's refinancing of its debt in January 2015.

 

Liquidity and capital resources

 

At the end of the period, ezzsteel had cash on hand of EGP 4.8 billion and net debt of EGP 13 billion. The company has a gearing of Net Debt / Equity of 2.64 times.

 

On the 18th of January 2015, the company announced that it had signed an EGP 1.7 billion long term loan agreement with the National Bank of Egypt. The funds have since helped the company effectively restructure existing facilities.

 

Outlook 2016

 

Following the successful start-up of our new DRI facility at Suez during 2015, ezzsteel will benefit from greater flexibility in respect of raw materials, and, combined with increased access to natural gas and utilities, this will enable us to improve our operating margins.

 

 

Divisional Overview

EZDK

Sales (EGP):

FY 2014

FY 2015

Value:

12,131

10,644

Mn

Volume: Long:

Flat:

1,863,247 796,716

1,836,419 616,662

 

Tonnes

Tonnes

Exports as % of Sales: Long:

Flat:

7

42

3

35

EBITDA:

875

824

Mn

Production:

Long Products:

1,976,894

1,684,859

Tonnes

Flat Products:

789,729

636,184

Tonnes

Billets:

2,038,082

1,772,644

Tonnes

ESR/ERM

Sales (EGP):

Value:

5,658

5,668

Mn

Volume:

1,204,043

1,263,203

Tonnes

Exports as % of Sales:

1%

EBITDA:

(41)

383

Mn

Production:

Long Products:

1,227,470

1,246,228

Tonnes

Billets:

742,531

722,203

Tonnes

EFS

Sales (EGP):

Value:

1,954

1,144

Mn

Volume:

Long:

 

379,094

 

 

244,583

 

Tonnes

 

EBITDA:

(223)

(208)

Mn

Production:

Long Products:

388,896

285,484

Tonnes

Billets:

331,866

107,120

Tonnes

 

 

 

 

 

- 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 2015.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 FCA) to update any forward-looking statements or to conform these forward-looking statements to ezzsteel's actual results

 

 

Click on, or paste the following link into your web browser, to view the associated PDF document.

http://www.rns-pdf.londonstockexchange.com/rns/6248T_-2016-3-30.pdf

 

 

This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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