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MarketScreener Homepage  >  Equities  >  Egyptian Exchange  >  GB Auto (S.A.E.)    AUTO   EGS673T1C012

GB AUTO (S.A.E.)

(AUTO)
  Report
End-of-day quote. End-of-day quote Egyptian Exchange - 10/25
2.77 EGP   +0.36%
2018GB AUTO GROUP : Slide show half-year results
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2018GB AUTO GROUP : Half-year results
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2018GB AUTO GROUP : 1st quarter results
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GB Auto : Reports 3Q16 Results

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11/10/2016 | 11:04am EDT
GB Auto Reports 3Q16 Results

Leading automotive industry player reports strong growth figures in volumes, revenues, and real profitability for the third quarter of 2016.

We join the vast major- ity of the Egyptian business community in welcoming the Central Bank of Egypt's move earlier this month to allow the free float of the Egyptian pound.

10 November 2016 - (Cairo, Egypt) GB Auto (AUTO.CA on the Egyptian Exchange), a leading automotive assembler and distributor in the Middle East and North Africa, an- nounced today its consolidated results for the third quarter of 2016, reporting solid prog- ress on volumes and revenues across most of its business lines.

For the third quarter of 2016, GB Auto's revenues reached LE 4,321.4 million, showing a substantial increase of 36.3% y-o-y. Net income from ongoing operations nearly tripled compared to last year, coming in at LE 39.4 million, with a net profit margin (from con- tinuing operations) that was 0.4 percentage points higher y-o-y at 0.9%.

"Overall, the third quarter of 2016 was a good one for GB Auto, as we continued to reap the benefits of our carefully calculated and well-executed strategy," said GB Auto Chief Executive Officer, Raouf Ghabbour. "While the macroeconomic landscape remained challenging, especially with the Egyptian pound's continued devaluation impacting our FX costs, consumer demand remained strong despite inflationary pressures and GB Auto was still able to grow its market share and record notable growth figures on the top- and bottom-line levels during the three-month period and year-to-date."

The challenging business and operating environment in Egypt and across the region saw markets contract, with some players drastically reducing their volumes as they strug- gled to cope with limitations in foreign currency supplies, bank facilities, and inventory. During the quarter, GB Auto was able to capture the under-served demand and conse- quently grow its market share, thanks to Management's decision to continue replenish- ing the company's stocks of in-demand models and products. The company's focus on after-sales also proved fruitful, as demand in the segment increased despite inflationary pressures.

In the Passenger Cars division in Egypt, GB Auto recorded a 52.0% increase in sales rev- enues and a 13.2% y-o-y increase in sales volumes, with sales reaching LE 2,464.3 million during the third quarter of 2016. On a nine-month basis, and despite a 1.2% decrease in volumes, GB Auto was able to grow its Passenger Car revenues by 30.2% y-o-y to LE 5,925.4, largely due to price increases the company had been implementing to gradu- ally migrate some of the effects of the increased cost due to a weakening currency onto the consumer.

On the regional level, the company continued to take measured steps in dealing with geopolitical and economic difficulties. In Iraq, GB Auto dramatically reduced overheads, finance charges, and old stocks in order to safeguard its positioning in the Passenger Cars market to capitalize on new opportunities. While Passenger Car volumes and revenues were down on a three- and nine-month basis, after-sales recorded impressive increases in top-line and margins. Algeria, where the regulatory climate has been somewhat deli- cate, followed a similar pattern to Iraq, with revenues from after-sales activities coming in at LE 2.6 million, 119.7% higher y-o-y. While GB Auto's outlook on its regional markets maintains some degree of optimism, Management will continue to operate with discre- tion until conditions begin to improve.

1

3Q 2016 Earnings Press Release

Meanwhile, revenues from the Motorcycles and Three-Wheelers division in GB Auto's home market, which target consumers within a low-income bracket, decreased by 2.2% y-o-y to LE 499.5 million. This came mainly as a result of higher prices dampening sales volumes, with motorcycles receiving a particularly hard blow that saw volumes for this product decrease by 44.7% y-o-y. In Iraq on the other hand, GB Auto has taken signifi- cant strides, growing its revenues from the division by nearly 3x to LE 7.2 million in 3Q16, propelled by higher sales volumes from three-wheelers.

On the Commercial Vehicles & Construction Equipment front, sales revenues for 3Q16 were up by 10.2% y-o-y to LE 283.4 million due to higher sales volumes, which rose by 9.7% y-o-y, particularly in the construction equipment and heavy truck segments. The country's renewed drive for investments in construction and infrastructure development is expected to further boost the division's performance going forward, especially given GB Auto's elevated market share and positioning as the preferential supplier of buses, trucks, and construction vehicles.

The Tires line of business was the third quarter's star-performer, with revenues rising significantly above 3Q15 levels to reach LE 101.2 million as the company was able to continue meeting the existing healthy market demand by resupplying its stocks, unlike the comparable period last year where shortage and stock rinsing measures affected per- formance. GB Auto continued to add brand representations to its portfolio during 3Q16, including its own in-house factory-produced brand, Primo, which has so far delivered promising sales figures, leading the company to plan on doubling its capacity from 4Q onwards.

GB Auto's Financing Businesses delivered a strong quarter, with total revenues from the line of business rising by 48.1% y-o-y in 3Q16 to LE 428.1 million and 62.0% in 9M16 to LE 1,218.1 million. GB Lease's healthy portfolio saw it rank second in market share, as per EFSA, while Tasaheel, GB Auto's most recent addition, continued to grow expo- nentially.

"We join the vast majority of the Egyptian business community in welcoming the Central Bank of Egypt's move earlier this month to allow the free float of the Egyptian pound. We also believe that the phase-out over time of fuel subsidies will drive sales of our smaller- engine models, where we have a robust lineup of models catering to a wide cross-sec- tion of consumers," said Ghabbour. "It would be premature to offer short-term guidance, but our experience throughout the currency crisis (including our strong pricing power throughout that period) leaves us optimistic that the issue has long been less 'pricing' than it has been 'availability' of foreign exchange. We are accordingly very optimistic regarding the medium- and long-term outlook for the economy and for our industry."

GB Auto remains on track with its motorcycles and three-wheeler manufacturing strat- egy, which should see production commence by the end of 1Q18.

Highlights of GB Auto's 3Q16 results, along with management's analysis of the company's performance and complete financials are available for download on ir.ghabbourauto.com.

2

3Q 2016 Earnings Press Release

Financial Statements

Income Statement Three Months Ended Nine Months Ended (LE million) 3Q15 3Q16 % Change 9M15 9M16 % Change

Egypt Passenger Cars Revenues

1,621.2

2,464.3

52.0%

4,550.9

5,925.4

30.2%

Egypt Motorcycles & Three-Wheelers Revenues

511.0

499.5

-2.2%

1,438.6

1,369.5

-4.8%

Egypt Commercial Vehicles & Construction Equipment Revenues

257.1

283.4

10.2%

961.2

814.2

-15.3%

Egypt Tires Revenues

42.8

101.2

-

143.4

314.9

-

Financing Businesses Revenues

289.1

428.1

48.1%

751.7

1,218.1

62.0%

Egypt After-Sales Revenues

143.0

204.0

42.7%

415.4

553.8

33.3%

Regional Revenues

286.1

280.0

-2.1%

1,268.0

850.5

-32.9%

Others Revenues

19.5

60.8

-

46.2

128.5

-

Total Sales Revenues

3,169.8

4,321.4

36.3%

9,575.4

11,174.9

16.7%

Gross Profit

Egypt Passenger Cars Gross Profits

159.1

214.5

34.8%

477.2

656.4

37.6%

Egypt Motorcycles & Three-Wheelers Gross Profits

83.8

66.2

-21.0%

239.2

203.4

-15.0%

Egypt Commercial Vehicles& Construction Equipment Gross Profits

36.9

54.4

47.2%

121.4

130.0

7.1%

Egypt Tires Gross Profits

1.0

19.5

-

12.9

64.6

-

Financing Businesses Gross Profits

58.7

109.1

85.7%

165.9

278.6

68.0%

Egypt After-Sales Gross Profits

42.1

66.2

57.1%

120.9

173.6

43.5%

Regional Gross Profits

9.8

3.7

-62.6%

46.0

25.3

-45.0%

Others Gross Profits

2.1

11.5

-

1.6

22.8

-

Total Gross Profit

393.6

545.0

38.5%

1,185.1

1,554.7

31.2%

Gross Profit Margin

12.4%

12.6%

0.2

12.4%

13.9%

1.5

Selling and Marketing

(128.4)

(156.4)

21.9%

(373.1)

(453.2)

21.5%

Administration Expenses

(98.2)

(96.1)

-2.1%

(274.0)

(259.5)

-5.3%

Other Income (Expenses)

9.3

(0.4)

-

24.4

17.8

-27.0%

Operating Profit

176.3

292.1

65.7%

562.4

859.7

52.9%

Operating Profit Margin (%)

5.6%

6.8%

1.2

5.9%

7.7%

1.8

Net Provisions and Non-Operating

(16.9)

12.2

-

(29.7)

(19.2)

-35.6%

FV of Investment Property

87.3

-

-

87.3

-

-

EBIT

246.8

304.4

23.3%

620.0

840.6

35.6%

EBIT Margin (%)

7.8%

7.0%

-0.7

6.5%

7.5%

1.0

Foreign Exchange Gains (Losses)

(40.0)

(80.8)

-

(115.2)

(147.9)

28.3%

Net Finance Cost

(79.4)

(164.0)

-

(254.0)

(426.2)

67.8%

Earnings Before Tax

127.4

59.6

-53.2%

250.8

266.6

6.3%

Income Taxes

12.7

(12.6)

-

(41.2)

(81.7)

98.4%

Net Profit Before Minority Interest

140.1

47.0

-66.4%

209.7

184.9

-11.8%

Minority Interest

(37.5)

(7.6)

-79.7%

(4.7)

7.5

-

Net Income

102.6

39.4

-61.6%

205.0

192.4

-6.2%

Net Profit Margin (%)

3.2%

0.9%

(2.3)

2.1%

1.7%

(0.4)

Net Income from Continuing Operations

15.3

39.4

-

117.6

192.4

63.5%

Net Profit Margin from Continuing Operations (%)

0.5%

0.9%

0.4

1.2%

1.7%

0.5

Head Office

Cairo-Alex Desert Road, Km 28 Industrial Zone

Abu Rawash, Giza, Egypt

Investor Relations Menatalla Sadek, CFA Chief Investment Officer

Andre Valavanis Financial Analyst

Sarah Maged Financial Analyst

Direct: +202 3910 0485

Tel: +202 3539 1201

Fax: +202 3539 0139

e-mail: ir@ghabbour.com ir.ghabbourauto.com

Shareholder Information

Reuters Code: AUTO.CA Bloomberg Code: AUTO.EY

Shares Outstanding: 1,094,009,733

About GB Auto S.A.E.

GB Auto S.A.E. (AUTO.CA on the Egyptian Exchange) is a leading automotive pro- ducer and distributor in the Middle East and North Africa. Across five primary lines of business - Passenger Cars, Motorcycles & Three-Wheelers, Commercial Vehicles

& Construction Equipment, Tires and Financing - the company's main business activities include assembly, manufacturing, sales and distribution, financing and af- ter-sales services. GB Auto's portfolio of brands includes Hyundai, Mazda, Geely Emgrand, Chery, Bajaj, Marcopolo, Iveco, Volvo Truck & Bus, Volvo Construction Equipment, Mitsubishi Fuso, YTO, Karry, SDLG, Aksa, Lassa, Yokohama, Goodyear, Westlake, Triangle, Grandstone, Diamond Back, Diamond Coin, Jumbo, Monroe and Gazpromneft. GB Auto has operations in Egypt, Iraq, Libya and Algeria, and is ac- tively pursuing opportunities in new geographies within its core footprint. The com- pany is headquartered in Giza, Greater Cairo Area, Egypt. www.ghabbourauto.com

Forward-Looking Statements

This document may contain certain "forward-looking statements" relating to the Company's business. These may be identified in part through the use of forward- looking terminology such as "will," "planned," "expectations" and "forecast" as well as similar explanations or qualifiers and by discussions of strategy, plans or inten- tions. These statements may include descriptions of investments planned or cur- rently under consideration or development by the Company and the anticipated impact of these investments. Any such statements reflect the current views of the Company with respect to future events and are subject to certain risks, uncertain- ties and assumptions. Many factors could cause the actual results, performance, decisions or achievements of the Company to be materially different from any fu- ture results that may be expressed or implied by such forward-looking statements.

GB - Ghabbour Auto SAE published this content on 10 November 2016 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 10 November 2016 15:04:06 UTC.


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Financials
Sales 2020 21 219 M 1 355 M 1 355 M
Net income 2020 538 M 34,4 M 34,4 M
Net Debt 2020 12 664 M 809 M 809 M
P/E ratio 2020 5,93x
Yield 2020 3,61%
Capitalization 2 992 M 190 M 191 M
EV / Sales 2020 0,74x
EV / Sales 2021 0,65x
Nbr of Employees 10 100
Free-Float 40,6%
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Technical analysis trends GB AUTO (S.A.E.)
Short TermMid-TermLong Term
TrendsBullishBullishNeutral
Income Statement Evolution
Consensus
Sell
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Mean consensus OUTPERFORM
Number of Analysts 7
Average target price 3,81 EGP
Last Close Price 2,77 EGP
Spread / Highest target 90,6%
Spread / Average Target 37,4%
Spread / Lowest Target -11,9%
EPS Revisions
Managers
NameTitle
Raouf Kamal Hanna Ghabbour Chairman & Chief Executive Officer
Karim Gaddas Group Chief Operating Officer
Abbas Hasan Abbas El Sayed Chief Financial Officer & Executive Director
Wissam Hamed Al-Adany Chief Information Technology Officer
Mohammed Naguib Ibrahim Independent Director
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