Egypt's Qalaa Holdings, an African leader in infrastructure and industry, reported on Sunday a 34 percent growth in revenues for the first nine months ending 30 September 2014. The 9-month revenues reached 4.65 billion Egyptian pounds (US$650.3 million), from 3.46 billion pounds a year earlier. The Egyptian company posted third-quarter revenues of 1,726.6 million pounds, up 11% compared with EGP 1,560.7 million in 2Q14. "Our financials reflect a clear improvement in operational performance both quarter-on-quarter and year-on-year owing to both strong management of the businesses across our core industries as well as an improving macro climate, particularly in Egypt," said Qalaa Holdings Chairman and Founder Ahmed Heikal. Moreover, Qalaa (CCAP.CA), one of Egypt's largest investment companies, also reported a third-quarter net loss after minority interests of 59.6 million Egyptian pounds ($8.34 million), a 67 percent decline on the previous quarter. Notably, Qalaa Holdings recognized in 3Q14 its gains on the sale the previous quarter of Sphinx Glass (EGP 85 million),a subsidiary of Glassworks (a non-core platform company of Qalaa Holdings). Although Qalaa booked foreign exchange losses (EGP 38.2 million) arising primarily from the devaluation of the Sudanese pound, the contribution from discontinued operations continued to improve, with a strong contribution from improving results at subsidiary ASEC Holding's Algerian cement producer Zahana Cement Co. "Our efforts to dispose of non-core companies — both discontinued and operational — are ongoing. To that end, Qalaa is engaged in negotiations on multiple fronts. Our expectation is thus that the Discontinued Operations line item will no longer be a component of our income statement by the end of 1Q15," said Qalaa Holdings Managing Director and Co-Founder Hisham El-Khazindar Meanwhile, said El-Khazindar, "We will continue to target a declining ratio of SG&A to sales even as we recognize that as economic conditions improve and market conditions change, we will have to be somewhat more aggressive in spending — in absolute terms — to capture new opportunities after several years of austerity." Qalaa is now implementing an enterprise resource planning (ERP) system at the group level. The information provided by MIS systems has brought to light a number of potential cost-cutting initiatives that management is presently studying. "As we continue to emphasize operational performance and bring greenfields into production, our target is simple: To return to profitability in 2016 as we seize the opportunity to grow and make a lasting contribution to the economic development of our home market of Egypt," concluded Heikal. "We expect to report FY14 EBITDA of some EGP 600-650 million and will look to see that figure grow significantly in the next fiscal year. In conjunction with our efforts to return to profitability, we are diligently working to reduce debt at every level of the organization." By year-end 2014, it is expected that total debt at the Qalaa Holdings level will decrease to US$ c. 260 million from US$ 300 million in FY13. The company continues to push forward with reducing debt carried on the operational company levels.
