Egypt’s Ezz Steel Records Significant Growth in Sales and Earnings in Q1 CY18 amid Strong Local Demand

Egypt’s largest rebar producer, Ezz Steel has recently released its production, sales and revenue numbers for Q1 CY18 (Jan-Mar’18) and the company’s earnings during the period have recorded a dramatic increase of 190% whereas its sales volume has surged by 18% y-o-y basis.

Ezz Steel’s EBDITA (Earnings before interest, taxes, depreciation and amortization) for January-March 2018 amounted to EGP 1.79 billion (USD 99.70 million), an increase of 190% from EGP 616 million (USD 34.5 million) in January-March 2017.

The long steel prices in Egypt’s local market went up by 71% while flat steel prices improved by 95%. Both long and flat steel export prices increased by 88% as against previous year. This can be attributed to Egypt’s anti-dumping duty imposition on cheap imports from China, Turkey, and Ukraine for a period of five years with effect from Dec’17.

According to the company’s officials, with trade restrictions in place, it was able to increase the volume of production and sales coupled with improvement in company’s average selling price leading to substantial increment in Ezz Steel’s overall turnover and profit margins.

In the start of Jan’18, the prices of rebar offered by Ezz Steel were at EGP 11,950 – 11,980/MT (USD 667-668/MT) which steadily increased to EGP 12,790 – 12,800/MT (USD 716 – 716/MT) on ex-works basis by the end of March 2018. Prices include VAT of 14%.

Production and sales volume

In Q1 CY18, the company produced 857,000 tonnes of long steel products, up by 10% from the corresponding period of 2017. The company produced 326,000 tonnes of flat steel products, similar to the output in the first quarter of 2017. The company produced 856,485 tonnes of billet during Jan-Mar’18, 15.61% more than the 740,845 tonnes produced in the same period of 2017.

In terms of sales volume, the group’s consolidated sales volumes totalled 1.18 MnT in Q1 of 2018, an increase of 18% year-on-year. The company sold 876,000 tonnes of long steel products in the first quarter of 2018, 30.2% more than the 673,000 tonnes sold in the corresponding quarter of previous year 2017. However, its flat steel sales decreased by 6% y-o-y basis to 303,000 tonnes in the first quarter of 2018. According to company’s official, the reason for this decline was that the flat steel exports decreased by 33%.

In Q2 starting from Apr’18, the domestic rebar prices in the country have remained stable due to subdued demand. The last offers for rebar from Ezz Steel were heard at EGP 12,528/MT (USD 701/MT).

Ezz Steel’s Performance in Q1 CY18

Source: Ezz Steel data