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GB Auto revenues reach EGP 5.878B in 1Q19, up 23.5% y-o-y

GB Auto revenues reach EGP 5.878B in 1Q19, up 23.5% 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 first quarter ended 31 March 2019. The Group booked revenues of LE 5,878.4 million in 1Q19, up 23.5% y-o-y. Net profit for the quarter stood at LE 16.0 million, down by 52.2% from the figure booked for the same quarter last year.

“We continue to operate in a market that is experiencing the transitory effects of a changing regulatory and macroeconomic landscape,” said GB Auto Chief Executive Officer Raouf Ghabbour. “On the regulatory front, the industry continues to adjust to the removal of customs duties on European passenger car models and the imposition of new licensing limits on three-wheel vehicles. Meanwhile, the first quarter has seen the Egyptian pound gain ground against the US dollar. Consumers are thus recalibrating their purchasing power with updated supply dynamics, while suppliers are readjusting their offerings. In the meantime, we have taken a proactive approach to these external shifts and continue to employ a combination of sales mix and portfolio adjustments, allowing us to maintain a solid top-line growth rate of 23.3% y-o-y at our A&AR segment.”

GB's A&AR segment booked revenues of LE 4,948.2 million in 1Q19, with revenues from the Group's Passenger Car LoB remaining flat y-o-y at LE 1,564.9 million. Continuous improvement in sales mix saw the PC LoB's gross profit grow 10.8% y-o-y to LE 151.7 million in 1Q19, while gross profit margin expanded to 9.7% against 8.7% in the previous year. 

Revenues at GB Auto's Two- and Three-Wheelers (2&3W) LoB fell by 2.4% y-o-y to LE 722.6 million in 1Q19, with three-wheeler volumes flattening in the face of new limits on the number of vehicles which may be licensed per month. Meanwhile, the Group's Commercial Vehicles and Construction Equipment (CV&CE) LoB saw significantly improved performance in the year to 1Q19, with revenues up 22.8% y-o-y to LE 384.7 million on the back of greater volumes and adjusted pricing. GB Auto's fast-growing Tires LoB booked quarterly revenues of LE 287.0 million, an increase of 59.7% y-o-y from their level in the previous year. Moreover, the Group's regional operations continued to deliver a rapid recovery during the quarter. With a strong across-the-board expansion in GB's Iraqi market, regional revenues came to LE 1,585.3 million in 1Q19, nearly doubling the figure booked in 1Q18.

On the home front, we are hopeful for proactive regulatory rectifications in line with new market dynamics, particularly with respect to the booming three-wheeler space,” said Ghabbour. "We are also anticipating a material normalization in demand patterns during the second half of the year, and will leverage our strong partnership with longstanding suppliers to profitably service this expected growth. The Group's diversified offering as well as its agile and adaptive business model leave me confident in our ability to capture the fundamentally-driven demand."

GB's financing business GB Capital recorded revenues in 1Q19 of LE 1,203.1 million before intercompany eliminations, climbing 18.3% y-o-y. In keeping with its record over recent quarters, GB Capital enjoyed rapid and broad-based expansion during the period. Sustained heavy demand for consumer finance products saw loan growth exceed budgeted figures both at GB Capital's microfinance providers Mashroey and Tasaheel and its factoring service provider Drive. Tasaheel and Mashroey expanded their top-line by 30.3% y-o-y to record a combined revenue of LE 547.6 million for 1Q19. The year to 1Q19 saw GB Capital grow its outstanding loan portfolio by 37.5% compared to the same period last year to reach LE 8,552.8 million as at 31 March 2019, with non-performing loans (NPLs) standing at 1.18% as of percentage of the total portfolio. GB Capital recorded a net income after minority of LE 118.6 million in 1Q19, up by 36.6% y-o-y, while its net annualized interest margin (NIM) climbed by 191 basis points y-o-y to record 13.1% for the quarter.

"Performance at GB Capital was highly impressive during the quarter," Ghabbour said. "Moving forward, we are confident that we will continue to profitably expand our portfolio while effectively maintaining a high-quality loan book. We are also continuously growing our financing portfolio offerings and taking a highly proactive approach to business development at GB Capital. We recently took a major step by teaming up with TMG and EFG Hermes to create a mortgage finance joint venture, taking the opportunity to create tangible value by serving Egypt's burgeoning population of young home buyers and further diversifying our array of financial offerings," Ghabbour concluded.

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