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GB Auto revenues reach LE25.8m, up 46.2% y-o-y

GB Auto revenues reach LE25.8m, up 46.2% y-o-y

ArabFinance: GB Auto (AUTO), a leading automotive company in the Middle East and North Africa and non-bank financial services provider in Egypt, announced today its consolidated results for the fourth quarter and full year ended 31 December 2018. In 4Q18, the Group recorded a 28.4% y-o-y increase in revenues to LE 7,040.5 million, with a net profit of LE 93.8 million.

Revenues for the full year were LE 25,812.0 million, up 46.2% y-o-y, while net profit reached LE 515.7 million. “2018 was by all measures a year of market recovery and growth for our Group, yet by no means was it one without challenges,” said GB Auto Chief Executive Officer Raouf Ghabbour. “We successfully realigned our portfolio and sales mix to shifting market dynamics and captured the recovery in consumer demand, while simultaneously having to navigate and absorb the ripple effects of new macro and market-level regulation. During 4Q18, consumers were anticipating a phase-out of customs duty on European passenger car imports starting January 2019.

This led to a temporary pullback in demand during the fourth quarter of what was otherwise a year of strong market recovery. Nonetheless, our A&AR segment delivered a strong 26.7% y-o-y revenue growth in 4Q18, while the segment’s full-year performance with a 46.5% growth compared to FY17 is reflective of the Group’s strength in an overall growing market.”

GB’s A&AR segment recorded full-year revenues of LE 22,118.4 million driven primarily by the Passenger Car line of business (LoB). PC sales were up 52.2% y-oy to LE 10,407.8 million on the back of both higher volumes and improved sales mix, leading to a marked improvement in profitability. Gross profit from the division was up more than threefold to LE 986.3 million, with an associated gross profit margin expansion to 9.5% compared to 4.1% in FY17.

The Two- and Three-Wheelers (2&3W) LoB recorded a 57.3% y-o-y increase in revenues to LE 3,470.2 million for the year. The Tires LoB also witnessed a strong increase in revenues amounting to LE 1,103.5 million in FY18, up 57.8% y-o-y, building on a significant growth trajectory from revenue levels of LE 203.2 million three years ago. GB Auto’s regional operations delivered revenues of LE 3,977.7 million or 35.3% higher than the previous year. Regional growth was supported by a 34.4% increase in PC volumes as well as the success of the 2&3W division in Iraq, which delivered a threefold increase in volumes in FY18.

“Following a period of readjustment to new market norms and a focus on margin recovery, our strategy heading into 2019 will see us focus on efficiency across the A&AR segment to maximize shareholder value” said Ghabbour. “Optimized inventory levels, favorable receivables and payables terms along with prudent cash management are some of the key avenues for extracting working capital efficiencies that management will pursue to further augment the segment’s performance.”

“We are also actively working to realign our passenger car portfolio with new regulatory realities. Our strategy will see us grow our CKD offerings during the second half of 2019 and expand our CBU offerings to stay ahead of the competition,” Ghabbour added. “Our target is to remain a versatile automotive producer and supplier that can capitalize on market opportunities.

GB Capital recorded revenues (pre intercompany eliminations) of LE 5,118.1 million in FY18, up 51.4% y-o-y. On a quarterly basis, GB Capital’s revenues were up 47.2% y-o-y to LE 1,484.6 million. GB Capital maintained an outstanding loan portfolio of LE 8,134.2 million as at 31 December 2018 (including the securitization impact), up 41.0%. Non-performing loans (NPLs) stood at 1.2% in FY18. GB Capital’s net income after minority was up 39.3% y-o-y to LE 359.4 million in FY18, and in 4Q18 it recorded a strong 44.8% increase to LE 125.4 million. Net interest margins (NIMS) increased by 430 basis points this year which was caused by both the interest rate cuts that took place in February and March, as well as better cost of funds negotiations with the banks and pricing mechanisms.

“GB Capital witnessed several milestones during 2018 that strengthened its balance sheet, helped it maintain a quality loan book with a lower NPL ratio and saw it forge a new strategic partnership with DPI,” Ghabbour said. “We were also successful in driving strong portfolio growth across our financing businesses during the year, and I remain bullish on the market and the business’ performance heading into 2019,” he concluded.

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