REG - EZZ Steel Company - EZZSTEEL REPORTS CONSOLIDATED FY 2017 RESULTS

Ezz Steel Co SAEAnnouncement

29/03/2018 07:05

RNS Number : 3296J
EZZ Steel Company - S.A.E.
29 March 2018
 

 
 
 
 
EZZSTEEL REPORTS CONSOLIDATED FY 2017 RESULTS
 
Cairo, 29 March 2018 - 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 12 month period ending 31 December 2017. 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/3296J_-2018-3-28.pdf
 




Key highlights
EGPMn




 


 


FY 2016


FY 2017


YoY % (+/-)







Net sales


23,189


41,742


+80







Gross profit 


2,512


4,355


+73







EBITDA*


2,404


4,420


+84







Net profit after tax and minority interest


162


(1,580)


 







Earnings per share**


0.30


(2,91)


 







Net debt to equity


1.87


2.15


 




 


 


 


 


 




 
*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 2017, after several years of disturbed activity, ezzsteel returned to normal industrial operating mode. Firstly, we did not suffer any interruptions to our electricity or natural gas supplies. Secondly, the foreign currency needed for the purchase of our imported raw materials was made available without limitation.
 
At the same time, we benefited from a favourable market environment. The sustained recovery in the international steel sector coupled with the anti-dumping duties applied in Egypt allowed us to improve our selling prices and therefore substantially increase our global turnover.
 
However, we were not able to run our plants at capacity because of an acute shortage in working capital facilities due to the significant devaluation of the Egyptian currency. As a result, our consolidated bottom-line remained negative throughout the year, though it slightly improved quarter by quarter.
 
We are confident that the readjustment of our working capital lines will be completed in the coming period, which will enable us to fully benefit from the prevailing favourable conditions in the local and international steel markets."
 




 
For further information:
 ezzsteel


 


 




   Kamel Galal


+20 2 3304 6060


+20 100 539 5499




   Ahmed Saad


+20 2 3304 6060


 




 CNC Communications


 


 




   Claire Maloney


+44 20 3219 8803


+44 7770 958 479




   Maximilian Karpf
 


+44 20 3817 9937
 


+44 7970 716 953
 




 
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 2017, the company produced 3.4 million tonnes of long products (typically used in construction) and 1.1 million 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 2017 were EGP 41.7 billion, representing an increase of 80 per cent year on year. Fourth quarter 2017 revenues increased by 8 per cent over the previous quarter and 50 per cent over the same period in 2016. Flat product sales, in particular, saw strong growth of 136 per cent year on year, reaching net sales of EGP 10.9 billion up from EGP 4.6 billion in 2016.
 
During 2017, prices in Egyptian pounds increased significantly reflecting the steep devaluation of the Egyptian currency that took place at the end of 2016. In the local market long steel prices were up 71 per cent while flat steel prices improved by 95 percent. Both long and flat export prices increased by 88 per cent compared to the prior year.
 




Sales after elimination
EGPMn


ESR/ERM


EZDK


EFS


Consolidated




   Long


8,596


18,665


3,201


30,462




   Flat


-


8,523


2,378


10,901




   Others


 


329


50


379




Total


8,596


27,517


5,629


41,742




 
Long steel products accounted for EGP 30.5 billion, or 73 per cent of sales in FY 2017, while flat steel products represented 26 per cent of sales at EGP 10.9 billion. Long product exports accounted for seven per cent of total long sales. Flat product exports accounted for 58 per cent of total flat sales, up 10 percentage points from FY 2016.
 




Sales Value
EGPMn


Domestic


per cent


Export


per cent




Long


28,454


93


2,008


7




Flat


4,537


42


6,364


58




 
Long sales volumes reached 3.3 million tonnes during FY 2017, three per cent lower than the 3.4 million tonnes sold during the same period last year. The local market for long products contracted slightly, with local sales volumes decreasing by 7 per cent. At the same time, the export market for long products developed very strongly, with volumes up 114 per cent year on year. The total value of long product sales for the full year 2017 grew by 66 per compared to the previous year.
 
Flat sales volumes, at EZDK and EFS, rose by 25 per cent to 1.13 million tonnes in FY 2017. While the local market remained stable as volumes decreased by just three per cent, 2017 saw a significant increase of 52 per cent in exported flat products.
 
The group's consolidated sales volumes totalled 4.5 million tonnes in FY 2017, a slight increase of three per cent from the previous year.
 
The contributions of ESR/ERM, EZDK and EFS to consolidated net sales for the period ending 31 December 2017 were approximately 21 per cent, 66 per cent, and 13 per cent respectively.
 
Long steel production volumes totalled 3.4 million tonnes during FY 2017, up two per cent compared to FY 2016. Flat steel production volumes increased by 22 per cent to 1.15 million tonnes for the period, compared to 944 thousand tonnes in the previous year.
 
Cost of Goods Sold
 
Consolidated Cost of Goods Sold (COGS) for FY 2016 represented 90 per cent of sales, 1 percentage point higher than in the previous year, leading to a decrease in gross profit margin of 1 percentage points, from 11 per cent in FY 2016 to 10 per cent in FY 2017.
 
EFS's COGS to sales ratio was at 113 per cent, ESR/ERM's COGS to sales ratio was 96 per cent while EZDK's COGS to sales ratio was 85 per cent. However, COGS to sales ratios improved by one percentage point respectively across all three facilities compared to 9M 2017.
 




 


Standalone figures


Consolidated




EGPMn


ESR/ERM


EZDK


EFS


ezzsteel




Sales


13,294


30,300


6,731


41,742




COGS


12,700


25,819


7,582


37,407




COGS/Sales


96%


85%


113%


90%




 
Gross profit
 
Gross profit of EGP 4.3 billion was recorded for FY 2017, an increase of 73 per cent from the EGP 2.5 billion recorded in FY 2016.
 
EBITDA
 
EBITDA for FY 2017 amounted to EGP 4.4 billion, representing an increase of 84 per cent from EGP 2.4 billion in FY 2016.
 
Tax
During 2017, ezzsteel had deferred tax liabilities of EGP 766.1 million and income tax expense of EGP 133.4 million
 
Net result after tax and minority interests
 
The net result after tax and minority interests was a loss of EGP 1.58 billion for FY 2017, compared to a profit of EGP 162 million during the same period in 2016.
 
Liquidity and capital resources
 
At the end of 2017, ezzsteel had cash on hand of EGP 4.7 billion and net debt of EGP 18.9 billion. The company has a gearing of Net Debt / Equity of 2.15 times.
 
Outlook
 
We are confident that the readjustment of our working capital lines will be completed in the coming period, which will enable us to fully benefit from the prevailing favourable conditions in the local and international steel markets.
 
Divisional Overview
 




EZDK
Sales (EGP):


 


FY 2016


FY 2017


 




 


Value:


13,511


30,300


Mn




 


Volume:


 


 


 




 


Long:


1,824,049


2,343,517


Tonnes




 


Flat:


733,910


866,655


Tonnes




 


Exports as % of Sales:


 


 


 




 


Long:


6


10


 




 


Flat:


43


52


 




 


EBITDA:


1,951


4,257


Mn




Production:


 


 


 


 




 


Long Products:


1,771,058


2,081,790


Tonnes




 


Flat Products:


753,575


886,766


Tonnes




 


Billets:


1,821,325


2,197,856


Tonnes




 


 


 


 


 




ESR/ERM
Sales (EGP):


 


 


 


 




 


Value:


6,877


13,294


Mn




 


Volume:


1,201,961


963,393


Tonnes




 


Exports as % of Sales:


-


-


 




 


EBITDA:


395


487


Mn




Production:


 


 


 


 




 


Long Products:


1,138,237


959,713


Tonnes




 


Billets:


514,676


592,659


Tonnes




 


 


 


 


 




EFS
Sales (EGP):


 


 


 


 




 


Value:


3,365


6,731


Mn




 


Volume:


 


 


 




 


Long:


441,679


333,716


Tonnes




 


Flat:


173,634


268,127


Tonnes




 


Exports as % of Sales:


 


 


 




 


Long:


-


-


 




 


Flat:


82


91


 




 


EBITDA:


(22)


(431)


Mn




Production:


 


 


 


 




 


Long Products:


395,425


344,111


Tonnes




 


Flat Products:


190,484


264,851


Tonnes




 


Billets:


301,832


469,338


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 2017. 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.



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