Al Ezz Gds Regs Regulatory News (AEZD)

28 Mar 2007 08:00

Al EZZ Steel Rebars S.A.E.28 March 2007 AL EZZ STEEL REBARS REPORTS CONSOLIDATED FULL YEAR 2006 RESULTS 2006: A Year of Restructuring • Net sales of EGP 11.6bn • Gross profit of EGP 3.2bn • EBITDA* of EGP 3.6bn • Net profit before tax of EGP 2.6bn • Tax and deferred tax of EGP 611m • Net profit after tax and minority interests EGP 995m • EPS of EGP 5.85 per share on a weighted average number of shares basis. • Net debt to Equity 1.26x • Corporate restructuring completed *EBITDA = sales - cost of goods sold - selling & marketing expense - G&A expense+ depreciation and amortisation Cairo, 28 March 2007 - Al Ezz Steel Rebars S.A.E. ("Ezz Steel") (CASE: ESRS;London Stock Exchange: AEZD), the largest independent producer of steel in theMENA region and market leader in Egypt, today announced its consolidated fullyear results for the period ending 31 December 2006. The audited results havebeen prepared in accordance with Egyptian Accounting Standards. Corporate restructuring Ezz Steel completed a comprehensive corporate restructuring during 2006 that hassignificantly changed the shape of its business. Through this process, it hasconsolidated substantially all of the steel operations of Ezz Group under EzzSteel to reflect the unified structure under which the company is now operating.During the 2006 financial year, Ezz Steel acquired the following stakes from EzzGroup: Al-Ezz El-Dekheila Steel Co - In February 2006, Ezz Steel acquired 4.016 million existing shares of EZDKAlexandria (EZDK) (representing Ezz Group' entire shareholding in EZDK), bringing Ezz Steel's holding in EZDK to 50.3% of its share capital. This was in exchange for 87.980 million newly issued Ezz Steel shares, thereby increasing Ezz Group's paid in capital in Ezz Steel. Ezz Flat Steel (EFS) From June through October 2006, Ezz Steel acquired from Ezz Group, a 35% interest in EFS, increasing Ezz Steel's interest in EFS to 54.2%. The price paid by Ezz Steel for the EFS shares was the book value of the shares as reported in the latest available financial statements of EFS at that time. Consequently, for the year ending 31 December 2006, the financial performance ofthe underlying businesses have been consolidated, with 11 months of EZDK'sperformance and three months of EFS's performance included in Ezz Steel's 2006financial results; therefore year-on-year comparisons with the Company'sprevious performance are difficult. The Full Year 2006 Consolidated Financials: Sales: Sales ESR/ESM EZDK EFS Total EGP Mn (12 months) (11 months) (3 months) Long 3,502.67 4,541.37 - 8,044.03 Flat - 2,678.62 602.01 3,280.63 DRI - 214.50 - 214.50 Others 0.19 103.04 0.72 103.95 Total 3,502.86 7,537.53 602.73 11,643.12 Net sales for the full year period surpassed EGP 11.6bn, with long steelproducts accounting for 69% of total sales and flat steel products representing28% of sales in 2006. The contributions of Ezz Steel, EZDK and EFS to net salesfor the period ending 31 December 2006 were 30%, 65%, and 5% respectively. The Egyptian market remained the focus for sales of long products while flatsales were evenly split between domestic and international markets, asillustrated below: Domestic % Export % Long EGP 6.18bn 77 EGP 1.86bn 23 Flat EGP 1.65bn 50 EGP 1.63bn 50 The above breakdowns are based on Ezz Steel's Consolidated financials whichinclude 12 months financial performance of ESR, 11 months financial performanceof EZDK and only 3 months financial performance of EFS. The 2007 Financials willreflect a full consolidation of the entities to cover the whole financialperiod. Cost of Goods Sold: ESR/ESM EZDK EFS The Company (12 months) (11 months) (3 months) Sales 3,502,859,511 7,537,526,677 602,730,264 11,643,116,452 COGS 3,218,030,157 4,666,587,699 527,149,552 8,411,767,408 COGS / Sales 92% 62% 87% 72% The Cost of Goods sold can be seen above, showing the value of EZDK's verticallyintegrated structure. Ezz Steel intends to replicate EZDK's successful businessmodel in the Company's other business units to increase profitability. The above breakdowns are based on Ezz Steel's Consolidated financials whichinclude 12 months financial performance of ESR, 11 months financial performanceof EZDK and only 3 months financial performance of EFS. Starting 2007, EzzSteel's Financials will reflect a full consolidation of the entities to coverthe whole financial period. Net profit after minority interests was EGP995m. This has delivered EPS of EGP5.85 per share, a 7.54% increase from EGP 5.44 per share in 2005 on a weightedaverage number of shares basis. Outlook The Company expects to maintain its current performance and to further benefitfrom the continued enhancements to flat steel production at EFS. The Companyexpects that there will continue to be strong demand for long products in boththe Egyptian and regional markets. Demand for flat steel products also expectedto continue in line with current performance. The company will also continue to pursue the following: • Vertical integration - Value creation through investments along thevalue chain such as the planned Direct Reduction plant in Suez City to provideDirect Reduced Iron (DRI) to Ezz Steel and its subsidiaries. • Horizontal integration - Capacity expansion of existing facilities atmarginal investment cost through an additional meltshop at the Suez City plantto serve the growing international demand for flat steel. • Geographic expansion - Continual evaluation of possible cross borderinvestments in the Middle East and North Africa region with high growthpotential and where ESR will have a competitive edge, starting with theestablishment of a steel making factory in Algeria to serve the booming Algerianconstruction industry. Comment Mr. Ahmed Ezz, Chairman and Managing Director of Ezz Steel, said: "As these solid results demonstrate, Ezz Steel continues to strengthen itsleading position in the Egyptian and MENA region's steel industry. The last yearhas been an important one, with the consolidation of our steel businesses intoEzz Steel to reflect more closely the operational management of the company. Nowthat this has been completed, we have a strong platform for the futuredevelopment of the business. In 2007, we expect to further benefit from thisrestructuring as we will be able to consolidate full year performance from bothEZDK and EFS." "We are pleased to have achieved record steel production this year, underliningthe modernity of our facilities and our expertise at maximising the efficiencyof our plants. In particular, we expect to see production of flat steelincreasing as EFS continues to further develop its production utilisation." Divisional Overview Please note that the below mentioned overview reflects the full year performanceof each entity on a stand alone basis rather than the consolidated portionswithin the 2006 Ezz steel consolidated financials. EZDK (Alexandria)2006 Sales: Value: EGP 8.1 bn Volume: Long: 1,785,000 tonnes Flat: 962,000 tonnes Exports as % of Sales: Long: 27% Flat: 54% EBITDA: EGP 3.4 bn2006 Production: Long Products: 1,721,000 tonnes Flat Products: 984,000 tonnes DRI: 2,936,000 tonnes Billets: 1,818,000 tonnes No. of Employees: 3,500 ESR/ESM (Sadat City & 10th of Ramadan City) 2006 Sales: Value: EGP 3.5 bn Volume: 1,281,000 tonnes Exports as % of Sales: 18% EBITDA: EGP 312 mn2006 Production: Long Products: 1,243,000 tonnes Billets: 763,000 tonnes No. of Employees: 1,500 EFS (Suez) 2006 Sales: Value: EGP 2.3 bn Volume: 781,000 tonnes Exports as % of Sales: 60% EBITDA: EGP 343 mn2006 Production: Flat Products: 784,000 tonnes No. of Employees: 1,000 Please copy and paste the following link into your web browser to access theconsolidated financial statements and their accompanying notes: http://www.rns-pdf.londonstockexchange.com/rns/8515t_-2007-3-27.pdf Enquiries:Ezz Steel Tel MobileKamel Galal + 20 2 762 2144 + 20 10 539 5499 Capital MS&LNicholas Bastin + 44 20 755 5117 + 44 7931 500066Neil Doyle + 971 4367 6160 + 971 508 432 465Jennifer Martin + 44 20 7307 5335 + 44 7841 401304 About Al-Ezz Steel Rebars Co. S.A.E. Al Ezz Steel Rebars (Ezz Steel) is the largest independent steel producer in theMiddle East and North Africa, with a total actual capacity of 5.3 million tonnesof finished steel per annum in 2006. It is the Egyptian market leader with over65% market share in terms of sales. In 2006, it produced 3.0 million tonnes oflong products (typically used in construction) and 1.8 million tonnes of flatproducts (typically used in consumer / industrial goods). Ezz Steel's customerbase is geographically diversified, with flat products mainly directed to exportmarkets, whereas long products are typically sold in the local and regionalmarkets. more than 70% of its plants are less than 10 years old using the latestin modern steel making technology. Disclaimer: This press release is issued by Al Ezz Steel Rebars S.A.E. ("Ezz Steel" or the "Company"), in connection with the disclosure of the Company's financials resultsfor the year 2006. This document includes forward-looking statements. Theseforward-looking statements include all matters that are not historical facts.In particular, the statements regarding the Company's strategy, the expectedstrength of demand for long products in Egypt and in regional markets and forflat steel in the international markets, and other future events or prospectsare forward-looking statements. Recipients of this document should not placeundue reliance on forward-looking statements because they involve known andunknown risks, uncertainties and other factors that are in many cases beyond thecontrol of the Company. By their nature, forward-looking statements involverisks and uncertainties because they relate to events and depend oncircumstances that may or may not occur in the future. Forward-lookingstatements are not guarantees of future performance and the Company's actualresults of operations, financial condition and liquidity, and the development ofthe industry in which the Company operates may differ materially from those madein or suggested by the forward-looking statements contained in this document.The cautionary statements set forth above should be considered in connectionwith any subsequent written or oral forward-looking statements that the Company,or persons acting on its behalf, may issue. Various factors could cause actualresults to differ materially from those expressed or implied by theforward-looking statements in this document including worldwide economic trends,global and regional trends in the steel industry, the economic and politicalclimate of Egypt and the Middle East and changes in business strategy of theCompany and various other factors. These forward-looking statements reflect theCompany's judgment at the date of this document and are not intended to give anyassurances as to future results. The Company undertakes no obligation to updatethese forward-looking statements, and it will not publicly release any revisionsit may make to these forward-looking statements that may result from events orcircumstances arising after the date of this document. None of Ezz Steel, or anyof its directors, officers or employees or any other person can give anyassurance regarding the future accuracy of the information set forth herein oras to the actual occurrence of any predicted developments nor shall assume, andeach of Ezz Steel, any of its directors, officers or employees or any otherperson expressly disclaims, any obligation, except as required by law, thelisting rules of the CASE or the LSE or the FSA, to update any forward-lookingstatements or to conform these forward-looking statements to Ezz Steel's actualresults. By accepting any copy of this document, you agree to be bound by the foregoinglimitations and restrictions. This information is provided by RNS The company news service from the London Stock Exchange