Ezz Steel said in a report that it registered a strong growth in the sales of reinforcing bars, especially in the local market, which contributed to increasing the company’s first quarter (Q1) sales.
The company registered sales of EGP 4.967bn in Q1 2016 compared to EGP 4.793bn during the same period last year, which marks a 4% growth. Ezz Steel attributed this increase to the 15% increase in sales of reinforcing bars, which was supported by local demand.
The company noted that this sales increase came despite the prices of the reinforcing bars decreasing 4% locally and 6% internationally. In addition, the prices of flat steel retreated by 19% locally and 27% internationally.
The report also mentioned that sales of the reinforcing bars amounted to EGP 4.3bn and that they contributed to 87% of Ezz Steel’s sales in the Q1 2016. The sales of flat steel amounted to EGP 617m.
In regards to exporting activity, the company explained that the exports of flat steel amounted to EGP 170m, while the exports of the reinforcing bars did not exceed EGP 22m.
Ezz steel sold approximately 1.19m tonnes in the first three months of the year, an increase of 10% from the 1.08m tonnes the company sold during the same period last year.
The report added that the production of the reinforcing bars registered 840,000 tonnes, an increase of 9% from Q1 2015, while the production of the flat steel retreated by 22%, registering 157,000 tonness.
The financial liquidity of the company reached about EGP 5.02bn compared to a net debt of EGP 12bn.
Ezz Steel has recorded a net loss of EGP 235.3m during Q1 2016 compared to EGP 146m during the same period last year.
He added that the company recorded negative performance as expected in Q1 2016 due to the decline of global steel markets and the fluctuation of the financial climate in Egypt.
Ezz Steel achieved significant development in marginal gains, either through the operating margin or the stability of production inputs. This came as a result of their business model’s flexibility in dealing with continuous variables over recent years. This flexibility will crucially support the gradual recovery of Ezz Steel.
The company’s report said the cost of sales recorded about 90% of the sales value in Q1 2016 compared to 95% in the same period last year. This means that the sales margin increased by 5%.
The research centre of Prime investment bank said that the losses of exchange differences incurred by the company worth $366.6m eliminated the development of marginal gains.
Prime predicted that Q3 was the most difficult period for Ezz Steel due to the gas outages that were expected to last two months, while the production capacity of the new iron reductase factory in Suez has not reached 20% since the beginning of the year.