REG - EZZ Steel Company - 3rd Quarter Results

Ezz Steel Co SAEAnnouncement

15/11/2021 07:00

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RNS Number : 3054S  EZZ Steel Company - S.A.E.  15 November 2021

 

 

EZZ STEEL REPORTS CONSOLIDATED 9M 2021 RESULTS

 

Cairo, 14 November 2021 - Ezz Steel (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
September 2021. 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:

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(http://www.rns-pdf.londonstockexchange.com/rns/3054S_1-2021-11-14.pdf)

 

Key Highlights

EGP Mn

 

                                          9M 2021  9M 2020
     Net sales                           49,056   26,458
           of which Exports (US$ Mn)      $1,014   $275
     Gross profit                        9,918    263
     EBITDA*                             9,291    (213)
     Net profit before tax**             4,866    (4,274)
     Net profit                          3,760    (4,111)
     Earnings per share (EPS)***         4.65     (5.20)

 

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

**      Deferred Taxes amounted to EGP 608mn; and Income Taxes to EGP
498mn

***    EPS = Net profit after tax & Minority Interest / No. of shares
at the end of the period, for the 6 months period ending 30    September

 

 

 

 

 

 For further information:

 Ezz Steel
    Ahmed Nabil            +20 2 27989844  +20 100 177 7703
    Haya Azab              +20 2 27989900  +20 122 998 8739

Comment

Commenting on the results, the board issued the following notes to the
shareholders:

·      Sales during 9M21 amounted to EGP 49,056 million compared to the
EGP 26,458 million recorded during 9M20. Rebar sales constituted 52% of total
sales, and HRC sales 46%. Sales totalled EGP 18,639 million during 3Q21.

·      Ezz Steel achieved a record export sales value which exceeded USD
1 billion in the first nine months of 2021. Exports amounted to USD 1,014
million, of which Hot Rolled Coil (HRC) sales contributed USD 822 million and
Wire Rod sales USD 191 million. Exports sales during 3Q21 amounted to USD 427
million, of which HRC sales contributed USD 346 million from and Wire Rod
sales USD 81 million.

·      Net profit after tax amounted to EGP 3,760 million during 9M21.
The net profit after tax achieved during 3Q21 of EGP 1,363 million underscores
the upward trend of the results during the current fiscal year.

·      The positive contribution of Ezz Flat Steel (EFS) and Ezz Rolling
Mills (ERM), wholly owned by Ezz Dekheila Steel, Alexandria (EZDK), continued
following the group's restructuring. EFS and ERM achieved a combined net
profit amounting to EGP 926 million during 9M21 and EGP 415 million during
3Q21. Their profits are reflected in the net profit of EZDK, and thus on the
consolidated net profit of Ezz Steel.

 

About Ezz Steel

Ezz Steel is the largest steel producer in the Arab World and North Africa
according to the World Top Steel Makers for 2020 published by World Steel
Association (WSA). The Company is the Egyptian market leader with a total
capacity of 7 million tonnes of finished steel products per annum. Ezz Steel
was established on 2/4/1994 as an Egyptian joint stock company in accordance
with the provisions of Law No. 159 for the year 1981.

In 2020, the Company produced 3.1 million tonnes of long products (typically
used in construction) and 1.3 million tonnes of flat products (typically used
in engineering industries, automotive, steel pipes and consumer products). Ezz
Steel 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 Ezz Steel's consolidated
financials, which include the consolidated financial performance of EZDK.
Following the latter's acquisition of EFS/ERM, both are full subsidiaries of
EZDK.

 

Sales

 

Consolidated net sales for 9M 2021 were EGP 49,056 million.

 

              Ezz Steel    EZDK           Ezz Steel

Standalone
Consolidated
Consolidated
 EGPMn*
    Long      7,874        17,800         25,674
    Flat      -            22,743         22,743
    Others    -            639            639
 Total        7,874        41,183         49,056

*after the elimination of intercompany transactions.

 

Long steel products accounted for EGP 25.7 billion, or 52% of sales in 9M
2021, while flat steel products represented 46% of sales at EGP 22.7 billion.
Long product exports accounted for 12% of total long sales. Flat product
exports accounted for 57% of total flat sales.

 

 Sales Value  Domestic  %    Export  %

 EGPMn
 Long         22,656    88%  3,018   12%
 Flat         9,789     43%  12,953  57%

Long sales volume decreased 2% from 760 thousand tonnes in Q2 2021 to 742
thousand tonnes in Q3 2021.  Long sales volumes were 2.10 million tonnes
during 9M 2021; flat sales were 1.5 million tonnes in 9M 2020.

 

The group's consolidated sales volumes totalled 3.6 million tonnes in 9M 2021.

 

Production

 

Long steel production volumes totalled 2.2 million tonnes during 9M 2021.

Flat steel production volumes reached 1.6 million tonnes for the period.

 

Cost of Goods Sold

 

Consolidated Cost of Goods Sold for 9M 2021 represented 80% of sales. Gross
profit margin reached 20% in 9M 2021.

 

Ezz Steel Standalone reported a COGS/Sales ratio of 89% for 9M 2021.

 

 

 EGPMn*      ESR                                 EZDK           Ezz Steel

Standalone
Consolidated
Consolidated
 Sales                      7,874                41,183         49,056
 COGS        7,011                               32,127         39,138
 COGS/Sales  89%                                 78%            79.8%

*after the elimination of intercompany transactions.

 

Gross profit

Gross profit of 9.9 billion was recorded for 9M 2021 for Ezz Steel
consolidated.

EBITDA

Ezz Steel consolidated EBITDA for 9M 2021 amounted to EGP 9.3 billion.

Tax

During 9M 2021, Ezz Steel had deferred taxes in the amount of EGP 608 million
and income tax of EGP 498 million.

Net profit

Net profit after tax reached EGP 3.8 billion in 9M 2021.

Net result after tax and minority interests

Net result after tax and minority interests recorded a profit of EGP 2.5
billion for 9M 2021.

Liquidity and capital resources

At the end of the period, Ezz Steel had cash on hand of EGP 3.3 billion and
net debt of EGP 34.7 billion.

 

 

 

Outlook

 

Global steel consumption continues to increase annually. It reached 1,461
million tons during 9M21, a significant increase of 8% compared to 9M20. Iron
& Steel analysts estimate that 2021 consumption will reach 1.95 billion
tons, an increase of 6% over 2020, then to 2 billion tons in 2022, an increase
of 2.6% over 2021. This growth would positively affect Ezz Steel's ability to
maintain its export momentum.

Domestic consumption, of both rebar and flat steel, is expected to witness
healthy growth in 2022. This is attributable to the unrealized latent demand
that resulted from the suspension of the issuance of building permits in 2020,
and then the implementation of the new building regulations that took time for
the different parties to become acquainted with its application details.
Furthermore, the elevated level of national projects' activities is
maintained. Worth noting in particular the "Decent Life Project", which begins
in 4Q21, and aims to develop the 4,700 villages in the Egyptian countryside.

 

Divisional Overview

 EZDK Standalone                                 9M 2021  9M 2020  Q3 2021  Q2 2021

 Sales (EGP):
                       Value:        Mn          32,555   24,876   12,804   10,904
                       Volume:
                       Long:         000 Tonnes  1,449    1,559    524      535
                       Flat:         000 Tonnes  830      743      253      267
 Exports as % of Sales:
                       Long:                     17%      11%      19%      12%
                       Flat:                     50%      43%      57%      52%
                       EBITDA:       Mn          5,700    687      1,784    2,057
 Production:
 Long Products:                      000 Tonnes  1,435    1,180    471      477
 Flat Products:                      000 Tonnes  833      770      281      273
                       Billets:      000 Tonnes  1,548    1,291    527      521

 Ezz Steel Standalone                            9M 2021  9M 2020  Q3 2021  Q2 2021

 Sales (EGP):
                       Value:        Mn          8,983    4,703    4,196    2,694
                       Volume:       000 Tonnes  644      551      246      222
 Exports as % of Sales:                          -        -        -        -
                       EBITDA:       Mn          669      (101)    227      229
 Production:
 Long Products:                      000 Tonnes  644      570      225      225
                       Billets:      000 Tonnes  649      591      208      217

 

 

 EZDK Consolidated                                          9M 2021  9M 2020  Q3 2021  Q2 2021

 Sales (EGP):
                                    Value:      Mn          43,834   22,982   17,322   14,793
                                    Volume:
                                    Long:       000 Tonnes  1,488    1,774    521      540
                                    Flat:       000 Tonnes  1,543    819      505      503
 Exports as % of Sales:
                                    Long:                   17%      10%      19%      12%
                                    Flat:                   57%      44%      61%      57%
                                    EBITDA:     Mn          8,658    (84)     3,079    3,057
                                    EBT         Mn          4,535    (3,656)  1,822    1,568
                                    Net Profit  Mn          3,235    (3,471)  1,175    1,030
 Production:
 Long Products:                                 000 Tonnes  1,526    1,845    501      503
 Flat Products:                                 000 Tonnes  1,579    902      534      545
                                    Billets:    000 Tonnes  1,582    1,926    527      523
 Ezz Steel Consolidated                                     9M 2021  9M 2020  Q3 2021  Q2 2021

 Sales (EGP):
                         Value:                 Mn          49,056   26,458   18,639   16,919
                         Volume:
                         Long:                  000 Tonnes  2,096    2,321    742      760
                         Flat:                  000 Tonnes  1,542    819      504      505
 Exports as % of Sales:
                         Long:                              12%      7%       14%      8%
                         Flat:                              57%      44%      61%      57%
                         EBITDA:                Mn          9,291    (213)    3,303    3,287
                         EBT                    Mn          4,866    (4,274)  1,946    1,676
                         Net Profit             Mn          3,760    (4,111)  1,363    1,209
 Production:
 Long Products:                                 000 Tonnes  2,171    2,415    727      728
 Flat Products:                                 000 Tonnes  1,579    902      534      545
                         Billets:               000 Tonnes  2,231    2,518    735      740

 

 

 

 

Disclaimer:

This press release is issued by Ezz Steel (formerly: Al Ezz Steel Rebars
S.A.E.) the "Company", in connection with the disclosure of the Company's
financial results for the quarter ending 31 September 2021. 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, 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 Ezz Steel, 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, no 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 Ezz Steel's
actual results.

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