ezzsteel REPORTS CONSOLIDATED Q1 2012 RESULTS Cairo, 13 September 2012 – 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 March 2012. The audited results have been prepared in accordance with Egyptian Accounting Standards. Key highlights EGP Million Q1 2011 Q1 2012 YoY (+/-) • Net sales 4,388 5,195 +18% • Gross profit 563 475 -16% • EBITDA* 631 538 -15% • Net profit before tax and minority interest 245 185 -24% • Net profit after tax and minority interest (10) 18 • Earnings per share ** (0.02) 0.03 • Net debt to equity 1.24x 1.21x *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
Transcript
ezzsteel REPORTS CONSOLIDATED Q1 2012 RESULTS
Cairo, 13 September 2012 – 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 March 2012. The audited results have been
prepared in accordance with Egyptian Accounting Standards.
Key highlights
EGP Million Q1 2011 Q1 2012 YoY (+/-)
• Net sales 4,388 5,195 +18%
• Gross profit 563 475 -16%
• EBITDA* 631 538 -15%
• Net profit before tax and minority interest 245 185 -24%
• Net profit after tax and minority interest (10) 18
• Earnings per share ** (0.02) 0.03
• Net debt to equity 1.24x 1.21x
*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:
“Reflecting a resilient operational performance, ezzsteel remained earnings positive during the
period, despite the weakness of global steel markets and the slowdown in the Egyptian economy.
We have achieved record volumes, both in terms of production and sales, and these enabled us
to absorb increased input costs and protect our bottom line. During 2012, we expect to maintain a
strong operational performance within a depressed global and domestic environment.”
For further information:
ezzsteel
Kamel Galal +20 2 3304 6060 +20 10 539 5499
Ashraf El Ghannam +20 2 3304 6060
Capital MSL
Nick Bastin +44 20 7255 5117 +44 7931 500 066
Ian Brown +44 20 7307 5347 +44 7908 251 123
James Madsen
+44 20 7307 5328
+44 7738 324 438
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 3.6million tonnes of long products (typically used in construction)
and 1 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 Q1 2012 were EGP5.2bn, representing an increase of18per cent year
on year. This increase in sales reflects higher prices during the period, with long product prices
rising by 6per cent year on year over both local and export markets, while flat steel prices rose
by6per cent domestically and declined by 1 per cent for export markets.
Sales after elimination ESR/ERM EZDK EFS Consolidated
EGP Mn
Long 1,442 1,908 645 3,995
Flat 1,041 86 1,126
Others 69 5 74
Total 1,442 3,018 736 5,195
Long steel products accounted forEGP 4.0 billion or 77per cent of sales in Q12012, while flat
steel products represented 22 per cent of sales at EGP 1.1billion. Long product exports
accounted for 2 per cent of total long sales, reflecting the continued strong domestic market
demand for ezzsteel’s long products, mainly from private house building activity. Conversely, flat
product exports accounted for 47per cent of total flat sales, in line with the same period in 2011,
due to the reduced activity in the global flat steel market.
Sales Value
EGP Mn
Domestic per cent Export per cent
Long 3,899 98 96 2
Flat 601 53 526 47
Long steel sales volumes reached 937,356 tonnes duringQ1 2012, 20 per cent higher than the
781,018 tonnes sold during the same period last year, driven by long product production coming
on stream at EFS.
Flat steel sales volumes fell by 7per cent to 272,014 tonnes in Q1 2012, principally due to the
switching of production at EFS to long products, due to higher demand and more attractive
pricing.
The group’s consolidated sales volume reached a total of1.2 million tonnes inQ1 2012, an
increase of 13 per cent from the 1.1 million tonnes sold in Q1 2011, due to increased long product
production at EFS following the commissioning of the long product mill during 2011.
The contributions of ESR/ERM, EZDK and EFS to the consolidated net sales for the period
ending 31 March 2012 were 28 per cent, 58 per cent, and 14 per cent respectively.
Long steel production volumes reached 1.02million tonnes during the period, a 17per cent
increase from the 866 thousand tonnes in Q1 2011, reflecting increased production from EFS.
Flat steel production volumes fell by 3per cent to 250 thousand tonnes for the period, compared
to 259 thousand tonnes in Q1 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.
Cost of Goods Sold
Consolidated cost of goods sold for Q1 2012 represented 91 per cent of sales, reflecting higher
raw material and energy costs.
EFS’s cost of goods sold, at 105per cent, reflects the impact of the continued suspension of flat
production.
Standalone figures Consolidated
EGP Mn ESR/ERM EZDK EFS ezzsteel
Sales 1,590 3,011 863 5,195
COGS 1,493 2,588 909 4,720
COGS/Sales 94% 86% 105% 91%
Gross profit
Gross profit of EGP 475million was recorded in Q1 2012, a decrease of16per cent from the EGP
563million in Q1 2011.
EBITDA
EBITDA for Q1 2012amounted to EGP 538 million, representing a decrease of 15 per cent from
EGP 631million recorded in Q1 2011.
Tax
The company’s tax charge fell from EGP 229 million in Q1 2011 to EGP 122 million in Q1 2012,
mainly due to the one – time adjustment to the deferred tax liability that was accounted for during
Q1 2011.
Net profit after tax and minority interests
Net profit after tax and minority interests was EGP 18million for Q1 2012, in comparison to a loss
of EGP 10 million for Q1 2011.
Liquidity and capital resources
At the end of the period, ezzsteel had cash on hand of EGP 1.4billion and net debt of EGP 8.2
billion. The company has gearing of Net Debt / Equity of 1.21times.
Outlook
Domestic demand for long products remains strong, as infrastructure projects and developers
return to the market. While the global market for flat steel remains weak, we will continue to
manage our production mix, particularly at EFS, to optimise efficiency and profitability.
Divisional Overview
EZDK
Sales (EGP): Q1 2011 Q1 2012
Value: 2,759 3,011 Mn
Volume:
Long:
Flat:
421,343
252,567
448,313
249,244
Tonnes
Tonnes
Exports as % of Sales:
Long:
Flat:
7
48
5
48
EBITDA: 506.0 464.1 Mn
Production:
Long Products: 431,141 507,672 Tonnes
Flat Products: 223,987 250,480 Tonnes
Billets: 487,042 497,421 Tonnes
ESR/ERM
Sales (EGP):
Value: 1,693 1,590 Mn
Volume: 360,424 338,573 Tonnes
Exports as % of Sales: 0 0
EBITDA: 83 83 Mn
Production:
Long Products: 344,991 348,241 Tonnes
Billets: 210,006 212,400 Tonnes
EFS
Sales (EGP):
Value: 346 863 Mn
Volume:
Long:
Flat:
0
39,759
152,164
22,770
Tonnes
Tonnes
Exports as % of Sales:
Flat:
Long:
100
56
0
EBITDA: 39 (11) Mn
Production:
Long Products: 89,485 159,376 Tonnes
Flat Products: 35,466 0 Tonnes
Billets: 145,944 199,992 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 3 month period ending
31March2012.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
