Elsewedy Electric, the leading wire and cable and integrated energy solution provider in the Middle East and Africa, announced its consolidated financial results for the first quarter ended 31 March 2012.
Q1 2012 versus Q1 2011
Consolidated revenues in Q1 2012 decreased by 3% to reach EGP 3.5bn versus EGP 3.6bn in Q1 2011, whilst gross profit remained flat to reach EGP 442m in Q1 2012. Earnings before interest, taxes, depreciation, and amortisation (EBITDA) in Q1 2012 decreased by 11% to reach EGP 297m versus EGP 336m in Q1 2011. Net profit after minority reached EGP 98m during Q1 2012 versus EGP 171m during Q1 2011.
Q1 2012 versus Q4 2011
Consolidated revenues decreased by 9% to reach EGP 3,457m for Q1 2012, versus EGP 3,799m in Q4 2011. Gross profit increased by 21% to reach EGP 442m during Q1 2012, versus EGP 366m in Q4 2011. EBITDA increased by 43% to reach EGP 297m in Q1 2012, versus EGP 207m in Q4 2011. Net profit after minority interest reached EGP 98m in Q1 2012 versus negative EGP 19m for Q4 2011.
Consolidated results highlights: Q1 2012 versus Q1 2011
Revenues in Q1 2012 decreased by 3% to reach EGP 3.45bn versus EGP 3.55bn in Q1 2011. The wire and cable segment achieved revenues of EGP 2.68bn in Q1 2012, 2% lower than Q1 2011. Turnkey revenues in Q1 2012 were 15% lower than Q1 2011, reaching EGP 445m. Meters revenues were 7% higher year over year (YoY), whilst transformers revenues were 9% lower. Electrical products revenues were 62% higher YoY.
Gross profit declined slightly by 1% to reach EGP 442m in Q1 2012 versus EGP 448m in Q1 2011. The gross profit in the wire and cable segment was 15% lower in Q1 2012 versus Q1 2011, (EGP 234m versus EGP 276m). Turnkey gross profit increased 24% in Q1 2012 to reach a gross profit of EGP 116m versus EGP 94m in Q1 2011. The meters division achieved an 11% increase in gross profit in Q1 2012 versus Q1 2011 reaching EGP 38m. The transformers division increased 33% in Q1 2012 to reach EGP 29m. Electrical products' gross profit reached EGP 25m in Q1 2012, 11% higher than Q1 2011.
EBITDA achieved in Q1 2012 stood at EGP 297m, 11% lower than Q1 2011. Selling, general and administrative expense (SGA) stood at 6.7% versus 5.8% in Q1 2011 (EGP 231m versus EGP 208m in Q1 2011.)
Net Income after minority reached EGP 98.3m during Q1 2012 versus EGP 171m during Q1 2011. The decline in the net income during Q1 2012 versus Q1 2011 was mainly due to the decline in EBITDA of 11% in addition to net interest expense
increasing from EGP 50.4m in Q1 2011 to reach EGP 86m in Q1 2012, an increase of EGP 35.6m. The effective tax rate also increased from 14% in Q1 2011 to reach 25% in Q1 2012. The increase in effective tax rate was due to a higher
contribution this quarter from the tax paying subsidiaries; however for the year 2012 the effective tax rate should be lower as the tax exempted subsidiaries contribution to profits is expected to be higher in the coming quarters.
Consolidated results highlights: Q1 2012 versus Q4 2011
Revenue during the first quarter of 2012 was 9% lower than Q4 2011; however on the gross profit level there was a 21% overall increase. With the continued challenging environment in which we are operating in, the wire and cables segment realised revenues of EGP 2.68bn, 6% lower quarter on quarter (QoQ), however gross profit increased 7% on the back of an improvement in the gross profit margin. Turnkey revenues were 32% lower QoQ, however there was a strong improvement in the gross profit margin which resulted
in a 37% increase in gross profit. Transformers revenue and gross profit were both significantly higher during Q1 2012 versus Q4 2011 (91% and 340% respectively.) Meters revenues during Q1 2012 were 16% lower QoQ, whilst gross profit declined 6% to reach EGP 38m.
EBITDA during Q1 2012 was 43% higher QoQ to reach EGP 297m. Net Profit after Minority reached EGP 98.3m in Q1 2012 versus a net loss of negative 19.2m in Q4 2011.
Commenting on the Q1 2012 results, Elsewedy Electric CEO Ahmed El Sewedy said; "The environment that we operate in continues to be challenging, however we were able to improve the performance of the group versus the previous quarter. In Egypt the electricity authority is still going ahead however there is slight pressure given longer payment terms. We expect similar revenue levels in 2012 in Egypt compared to 2011, however we expect a marked improvement in Egypt in 2013 once the presidential elections are behind us with political stability restored and the focus back again on infrastructure spending.
"Our Egyptian operations saw a drop in local sales, however on the export side volumes continued to increase as compared to Q1 2011. On the export side, Libya looks positive with a pickup being seen this quarter in all the products including cables, transformers, meters and turnkey. As for the wind turbines destined for Libya, the LC has been opened and we are currently in the shipping stage. From the indications we are receiving we are quite optimistic that the remaining balance of the contract will be shipped during 2012 and first half of 2013. As for our cables operation in Syria, approximately 20% of sales were for the local market and the balance for the export markets, most notably Iraq and the GCC. We continue to be optimistic on our operations in Qatar and are very positive on Algeria where we have added HV cables to our portfolio of products.
"As for the other segments, we continue to be optimistic on the turnkey with a continued focus on projects in Africa. In addition we have a substantial number of HV cable projects in Qatar, Kuwait, Egypt and Arbil. Regarding the transformers Egypt and Zambia are performing well and we expect Syria and Nigeria to pickup during the third quarter. In Egypt, we recently got KEMA certification for our dry transformer with a rating of 10MVA, which is a significant milestone for the factory as it is the first factory in Egypt and the Middle East to be certified in this rating. As for the meters we are expecting a good year with a continued improvement in the
Wires and cables segment
Wires & Cables segment revenues decreased by 2% to reach EGP 2,678m in Q1 2012 versus EGP 2,719m in Q1 2011. Gross profit in Q1 2012 decreased 15% to reach EGP 234m versus EGP 276m in Q1 2011.
In terms of volumes, the segment sold 38,178 tons of cables in Q1 2012 versus 35,276 tons in Q1 2011, an increase of 8%. The main growth markets in volumes during Q1 2012 versus Q1 2011 were from Qatar, KSA, Algeria and Egypt, whilst Syria and Sudan saw a decline in volumes.
Gross profit per ton in Q1 2012 reached EGP 4,000 versus EGP 5,510 per ton in Q1 2011. It is important to note that this drop is related to metal accounting and is expected to revert back to the normal levels in the coming quarters. On the other hand, the increase in the gross profit margin for the raw materials increased to reach 15% in Q1 2012 versus 10% in Q1 2011. The
overall gross profit margin for wire and cables reached 8.7% in Q1 2012 versus 10.1% in Q1 2011.
As of March 31st, 2012 our cables backlog reached 85,000 tons geographically diversified in the Gulf, Egypt, Europe, Africa and the Middle East.
Whilst the turnkey and contracting business witnessed a 15% decline in revenues during Q1 2012 versus Q1 2011, gross profit increased 24% on the back of an improvement in the gross profit margin which reached 26% in Q1 2012 versus 18% in Q1 2011.
Backlog as of March 31st, 2012 stands at EGP 4.6bn, including EGP 2.05bn of high voltage cables. The backlog number includes projects in Egypt, GCC, Middle East and Africa for power generation, distribution and transmission lines.
Revenues from the meters segment reached EGP 163m in Q1 2012 versus EGP 152m in Q1 2011. Gross profit increased 11% to reach EGP 37.9m in Q1 2012.
Gross profit margin improved to 23.2% in Q1 2012 versus 22.3% in Q1 2011. Backlog as at March 31st 2012 reached €60m.
Revenues from the transformers segment decreased 9% from Q1 2011 to Q1 2012 to reach EGP 107.8m whilst gross profit increased 33% to reach EGP 28.7m.
Approximately half of Egypt revenues in Q1 2012 were to the local market whilst the balance was exports to Zambia, Ghana, Iraq and KSA. Both Syria and Sudan revenues were lower in Q1 2012 versus Q1 2011 mainly as a result of a decision taken in both countries to sell on a cash basis to reduce the Company's exposure to any further devaluation in the currency. In the case of Syria, the Company also does not fix any of the contracts in Syrian Lira to mitigate any further drop in the currency. However the segment still performed well, mostly supported by the Egypt and Zambia operations; both achieved impressive growth this quarter.
As at March 31st 2012 the backlog in the transformers segment stood at $64m (not including an additional $22m for Syria which was suspended.) The increase in backlog is mainly from additional orders from the Egypt and Zambia operations.
Other electrical products
Revenues from the Electrical products segment increased by 62% in Q1 2012 versus Q1 2011, to reach EGP 63m, whilst gross profit increased by 11% to reach EGP 25m.
Net debt increased by 4% on March 31st, 2012 to reach 4,332m versus 4,164 as of December 31st, 2011.
This document may contain certain forward-looking statements relating to the company's business. These may be identified in part through the use of forward-looking terminology such as "will", "planned", "expected" and "forecast". Any such statements reflect the current views of the company with respect to future events and are subject to certain risks, uncertainties and assumptions. Many factors could cause the actual results, performance, decisions or achievements of the company to be materially different from any future results that may be expressed or implied by such forward-looking statements.