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Ezz Steel expects to reduce its losses gradually due to pound's flotation The flotation and the increase in steel prices globally are pushing the company to take advantage of its improved performance, said the company's chairperson
Ezz Steel will likely witness a gradual shift towards improving its operating margin during the coming period, predicted the company's chairperson and managing director Paul Chekaiban. This will help the company to reduce its losses amid the pound's flotation in November and the increase in steel prices globally. The company said that the price of rebar steel rose at an annual rate of 9% during the first nine months of the year, while the price of flat steel fell by 2% during the same period. Ezz Steel's losses increased after minority interests to EGP 564m in the first nine months of 2016 compared to EGP 509m during the same period of 2015, with an annual increase rate of 10.8%. This increase in losses comes despite the rise in revenue at an annual rate of 17% to record EGP 14.92bn compared to EGP 12.759bn during the comparison period. The company's gross profit rose from EGP 586m to EGP 1.458bn. Chekaiban explained in a report released by the company that there were negative factors, both at the global and local level, which led to a negative performance despite the radical improvement in operating margins. He attributed the negative performance to the significant stagnant demand in the global steel market as well as the financial crisis in Egypt. The report pointed out that rebar steel recorded about EGP 12.496bn to Ezz Steel sales, as the company produced about 2.64m tonnes compared to 2.39m tonnes during the first nine months of 2015 with the support of high domestic demand by 10%. Flat steel also recorded sales of about EGP 2.294bn, after demand increased by about 8%. The company sold EGP 559,000 tonnes during the first nine months of 2016. Ezz Steel succeeded in achieving exports of about EGP 1.06bn during the first nine months of 2016, divided between EGP 779m of flat steel and EGP 280m of rebar steel. The company recorded a sales volume of about 3.2m tonnes with an annual increase of 10%, compared to the first nine months of 2015, which recorded sales of 2.9m tonnes. On the other hand, the company pointed out that the cost of sales recorded about 90% of the sales value during the first nine months of 2016, compared to 95% during the same period in 2015, which increased the gross profit margin by 10%. This reflects the improved utilisation levels of the production capacity of the company, as well as the slight improvement in the natural gas shortage due to the increase in liquefied natural gas imports to Egypt.
