Qalaa Holdings turns to profitability in 2Q 2022, recording EGP 361m in consolidated net profit

Company's management warns of impact of local currency devaluation on its business

Qalaa Holdings turned profitable during the second quarter (2Q) of 2022 to record consolidated net profit of EGP 361.6m, compared to net loss of EGP 401.5m during the same period of 2021.
The consolidated revenues of Qalaa Holdings increased to EGP 27bn in 2Q 2022, with an annual growth rate of 165%.
In this context, Ahmed Heikal, Founder and Chairperson of Qalaa Holdings, said that the exceptional results achieved by Qalaa reflect the outstanding flexibility of the group in adapting to the constant changes that occur in the economic landscape and its ability to face challenges and work in various difficult operating environments.
Heikal explained that with the continuation of the Russian-Ukrainian war, the challenges the world is witnessing today have exacerbated from the disruption of supply chains and lack of energy supplies to labor market pressures, increased inflation and financial market turmoil, which prompted central banks around the world to curb monetary easing, an approach that is expected to continue during the year. He pointed out that the tightening of monetary policies, especially by the US Federal Reserve, led to increased pressures on the value of currencies and exacerbated debt levels in emerging markets and Egypt.
Heikal expressed the administration's confidence in the soundness of the government's direction and management of the Egyptian economy, as well as in the competitive advantages enjoyed by Qalaa from the diversity of its energy projects, the local manufacturing capabilities that are unique to it, and the export activities that support its business.
Heikal added that Qalaa continued its strong performance that began in 2022 and succeeded in enhancing the results of its subsidiaries during the second quarter of the year, as Taqa Arabia recorded outstanding results, thanks to the strong performance of the petroleum products distribution activity and Master Gas Company, and supported by the high rates of electricity distribution by Taqa Power and volume growth of CNG distribution.
The National Printing Company continued to benefit from increased production capacity and improved pricing efficiencies, while Ascom continued to achieve strong results, driven by higher export earnings from carbonate and chemical maker Ascom and GlassRock. Finally, the Egyptian Refining Company witnessed a significant improvement in the refining profit margin as a result of the increase in the prices of petroleum products, which contributed to supporting the profitability rates of the project and thus improving the net profit of Qalaa Capital.
Hisham El-Khazindar, Co-founder and Managing Director of Qalaa Holdings, said that the management is proud of the strong operational performance achieved by Qalaa and led to the recording of net profits, but at the same time it is aware of the challenges that may increase during the coming period, especially since the results of Qalaa are significantly affected by price fluctuations since a large portion of its debt is denominated in foreign currencies. Thus, any devaluation of the Egyptian pound will affect the results.
He added that the management is working to improve the company's capital structure by continuing to focus on restructuring the company's debts as it is one of its most important priorities, noting that the management has reached advanced stages in its negotiations with the lenders.