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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 - 10/28
2.68 EGP   -2.19%
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 2Q17 Results

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08/08/2017 | 02:40pm EDT
GB Auto Reports 2Q17 Results

Automotive leader's revenues record growth of 41.0% q-o-q supported by non-auto lines of business and gradual improvement in auto segment

Management has adopted a new dis- closure structure that separately reports the core automotive and high-margin Financing Businesses. This is an exercise in transparency that should provide our shareholders with a bet- ter view on valuation

8 August 2017 - (Cairo, Egypt) GB Auto (AUTO.CA on the Egyptian Exchange), a leading automotive company in the Middle East and North Africa and non-bank fi- nancial services provider in Egypt, announced today its consolidated results for the second quarter and first half of 2017. The Group recorded revenue gains for both the three and six-month periods even as the core automotive business continues to operate in a challenging environment.

Starting 2Q17, management has adopted a new disclosure structure that separately re- ports the core automotive and high-margin Financing Businesses. The two businesses are sharply different in terms of financing and capital structure as well as underlying risks. To that end, management views the separation of reporting - with independent KPIs - as a prudent step that will provide a true reflection of the business's net debt, facilitate more accurate valuations and reveal hidden value in the company's share.

"By presenting both businesses as separate entities, we are effectively freeing the auto- motive segment from the debt levels necessary for the operation of financing business- es. We are also providing analysts and investors with clear accounts for our financing businesses and a better understanding of its development, performance indicators and associated risks," said Ghabbour. "I want to be clear, though, that this is an exercise in transparency that should provide our shareholders with a better view on valuation."

GB Auto Group GB Auto (Auto-Related) GB Capital (Financing Businesses)

With the new reporting structure, management will focus its discussion on the perfor- mance of GB Auto and on GB Capital. These segment financials reflect the way the busi- ness is operated and provide a more accurate development of top-line and its growth potential, cash flow generation ability, and the relevant net financial debt development than the consolidated group financials. GB Capital is a financing business where the level of net debt is a direct reflection of asset portfolio size, which in turn drives earnings. GB Capital's net debt is therefore fully backed by assets and loans extended to customers and hence a growth or shrinkage in its level is not a reflection of cash generation ability or the ability to pay dividends by GB Auto Group. The relevant metric that is influenced by the operations' cash generation ability is the net financial debt of GB Auto (Auto & Auto-Related).

GB Auto Group recorded consolidated revenues of LE 4,177.4 million in 2Q17, up 6.3% y-o-y, while on a year-to-date basis revenues grew 4.2% y-o-y in 1H17 to LE 7,140.7 mil- lion. Revenue growth during the second quarter was equally driven by GB Auto (Auto

& Auto-Related) and GB Capital (Financing Businesses), with the former recording stand- alone revenues of LE 3,592.6 million in 2Q17, up 3.0% y-o-y and contributing 86% to the Group's top-line and 42.4% to revenue growth in absolute terms. Meanwhile, GB Capital reported a 32.4% y-o-y growth in standalone revenues (after intercompany elimina- tions) to LE 584.8 million in 2Q17, contributing 14.0% to Group revenues and 57.6% to revenue growth in absolute terms. On a year-to-date basis, GB Capital was the primary driver for revenue growth in 1H17, where a 49.7% y-o-y increase in the segment's rev- enues (after intercompany eliminations) offset a 1.7% y-o-y decline in revenues at the GB Auto and Auto-Related segment.

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2Q17 Earnings Press Release

GB Auto & Auto-Related segment's results were weighed down by a slow y-o-y per- formance at the Egyptian passenger car segment following the aftershock of the Egyp- tian pound's float in November 2016. However, the passenger car segment is starting to show clear signs of recovery, with segment revenues climbing 43.1% q-o-q in 2Q17 compared to a 57.7% q-o-q decline in 1Q17.

"We are seeing clear signs that the macroeconomic challenges which resulted in an industry-wide slump are receding. And while the passenger car market is operat- ing at levels 50.0% below last year, consumers are adapting to new market prices," said GB Auto Group Chief Executive Officer Raouf Ghabbour. "After having with- held sales to our network of authorized dealers in the first quarter of the year - a decision born from the fact that dealers were overstocked - we are now seeing volumes steadily recovering and are now back to our traditional market share level north of 30.0%. Our inventory levels are accordingly coming down, and we expect them to reach historical low levels by year's end in terms of volumes."

GB Auto Group continues to drive volume recovery through the careful deploy- ment of special price promotions and dealer compensation packages. This has weighed down gross profitability for the Egypt Passenger Car segment and in-turn saw the Group's gross profit decline 16.6% y-o-y to LE 473.3 million in 2Q17, yielding a gross profit margin of 11.3% versus 14.4% in the same period last year. Meanwhile, a 30.6% y-o-y increase in SG&A coupled with a 135.6% y-o-y increase in finance costs to LE 332.6 million - driven by the Central Bank of Egypt's 500 basis-point interest rate hike - together saw GB Auto turn a net loss of LE 150.9 million in 2Q17 and LE 305.5 million for the six-month period.

"We are working tirelessly to maintain tight control on our operating costs, having implemented measures that should see SG&A as a percentage of sales kept within acceptable levels. We are rationalizing headcount across all functions, adopting a more targeted approach to our marketing expenses and exploring means through which to maximize energy efficiency in our premises," said Ghabbour. "In parallel, GB Auto Group is scaling back debt and payable levels with a net (automotive and finance combined) reduction quarter-on-quarter to the tune of c.LE 660 million as we seek to streamline financing with our asset and inventory levels. In the quarters ahead, we see a trend in debt reduction that will take us to historical levels in-time for an anticipated roll-back of the temporary and unsustainably high interest rates."

On a segment basis, GB Auto's Egyptian Passenger Cars performance remained cor- related with the wider market, which recorded a 44.0% y-o-y decline to just 39,980 units as of 1H17. As such, the division turned in a 38.8% y-o-y drop in revenues to LE 1,267.1 million in 2Q17, with volumes down 55.4% during the quarter to 6,483 units. That said, on a quarterly basis, segment volumes rose 61.0% q-o-q in 2Q17 with division revenues up 43.1% q-o-q.

Meanwhile, revenues from the Motorcycles and Three-Wheelers division in Egypt recorded a solid 20.3% y-o-y (40.8% q-o-q) increase to LE 535.8 million in 2Q17, making a quick recovery from the previous quarter's slow performance. As man- agement previously noted, segment volumes picked up sharply beginning in March 2017, with the market already making a recovery toward normal levels par- ticularly in the three-wheeler segment.

2Q17 Earnings Press Release

Commercial Vehicles & Construction Equipment recorded a 15.4% y-o-y decline in revenues in 2Q17 to LE 239.4 million, while on a year-to-date basis revenues inched down only 3.7% y-o-y to LE 511.1 million. The division outperformed the overall market, which like the passenger car market saw a 50% volume slump year-on-year. Management sees the segment poised for accelerated growth in the coming period, particularly with the revival of the tourism industry, where the company has seen

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rising appetite for its product lineup, a breakthrough in the segment after GB Auto successfully ventured into the urban transport and intercity bus markets.

Tires continued to deliver a strong performance with revenues recording period-on- period growth and margins maintained at healthy levels. Revenues from the division came in at LE 166.7 million in 2Q17, a 36.0% y-o-y increase (65.2% q-o-q) as con- sumers consider tires a necessary investment.

Revenues from GB Auto's After-Sales division rose 28.7% y-o-y to LE 243.6 million in 2Q17. In 1H17, the division recorded revenue growth to LE 482.8 million or 38.0% higher than the 1H16 figure of LE 349.7 million.

On the Regional front, GB Auto's operations in neighboring countries delivered a three-fold increase in revenues to LE 1,074.8 million in 2Q17. Revenue growth was largely driven by passenger car sales in Iraq, where market activity is picking up as the country takes gradual steps to stability.

Looking ahead, Ghabbour noted, "We knew heading into the year that the macro and mar- ket realities would mean a difficult and transformative 2017. We have navigated the first six months, and in the process seen our diverse portfolio of businesses stand us in good stead. We are confident that the remaining quarters will witness continued top-line im- provement, and that bottom-line profitability will gradually improve as volumes recover at the same time as both interest rates and our Auto & Auto-Related net debt levels subside."

Highlights of GB Auto Group's 2Q17 results, along with management's analysis of the company's performance and complete financials, are available for download on ir.ghabbourauto.com.

3

2Q17 Earnings Press Release

GB Auto Group Financial Statements

Income Statement

Three Months Ended Six Months Ended (LE million) 2Q16 2Q17 % Change 1H16 1H17 % Change

Egypt Passenger Cars Revenues

2,069.9

1,267.1

-38.8%

3,461.1

2,152.4

-37.8%

Egypt Motorcycles & Three-Wheelers Revenues

445.5

535.8

20.3%

870.0

916.3

5.3%

Egypt Commercial Vehicles & Construction Equipment Revenues

283.1

239.4

-15.4%

530.8

511.1

-3.7%

Egypt Tires Revenues

122.6

166.7

36.0%

213.7

267.6

25.3%

Financing Businesses Revenues

441.7

584.8

32.4%

790.0

1,182.4

49.7%

Egypt After-Sales Revenues

189.2

243.6

28.7%

349.7

482.8

38.0%

Regional Revenues

347.1

1,074.8

-

570.5

1,492.6

-

Others Revenues

29.7

65.3

-

67.7

135.5

-

Total Sales Revenues

3,928.8

4,177.4

6.3%

6,853.4

7,140.7

4.2%

Gross Profit

Egypt Passenger Cars Gross Profits

269.9

57.7

-78.6%

441.9

182.7

-58.7%

Egypt Motorcycles & Three-Wheelers Gross Profits

54.4

65.5

20.5%

137.1

94.3

-31.2%

Egypt Commercial Vehicles& Construction Equipment Gross Profits

42.6

42.4

-0.5%

75.6

94.1

24.4%

Egypt Tires Gross Profits

24.2

28.5

17.6%

45.1

47.1

4.6%

Financing Businesses Gross Profits

90.8

158.7

74.7%

169.5

303.4

78.9%

Egypt After-Sales Gross Profits

59.1

72.7

23.1%

107.4

150.1

39.8%

Regional Gross Profits

21.4

40.8

90.8%

21.6

80.6

-

Others Gross Profits

4.9

7.0

42.4%

11.3

21.1

85.6%

Total Gross Profit

567.3

473.3

-16.6%

1,009.7

973.3

-3.6%

Gross Profit Margin

14.4%

11.3%

-3.1

14.7%

13.6%

-1.1

Selling and Marketing

-152.2

-214.7

41.1%

-296.8

-419.2

41.2%

Administration Expenses

-90.9

-102.8

13.2%

-163.4

-193.1

18.2%

Other Income (Expenses)

6.8

48.8

-

18.2

64.8

-

Operating Profit

331.1

204.6

-38.2%

567.6

425.9

-25.0%

Operating Profit Margin (%)

8.4%

4.9%

-3.5

8.3%

6.0%

-2.3

Net Provisions and Non-Operating

-20.0

-39.9

99.9%

-31.4

-56.6

80.2%

EBIT

311.1

164.6

-47.1%

536.2

369.3

-31.1%

EBIT Margin (%)

7.9%

3.9%

-4.0

7.8%

5.2%

-2.7

Foreign Exchange Gains (Losses)

-6.0

-23.8

-

-67.1

-128.3

91.2%

Net Finance Cost

-140.7

-332.6

-

-262.2

-610.4

-

Earnings Before Tax

164.5

-191.8

-

206.9

-369.3

-

Income Taxes

-40.7

21.2

-

-69.1

35.0

-

Net Profit / Loss Before Minority Interest

123.8

-170.6

-

137.9

-334.3

-

Minority Interest

0.6

19.7

-

15.1

28.9

91.7%

Net Income/Loss

124.4

-150.9

-

152.9

-305.5

-

Net Profit Margin (%)

3.2%

-3.6%

-6.8

2.2%

-4.3%

-6.5

4

2Q17 Earnings Press Release

GB Auto SAE published this content on 08 August 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 08 August 2017 17:39:08 UTC.


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Financials
Sales 2020 21 377 M 1 366 M 1 366 M
Net income 2020 580 M 37,0 M 37,0 M
Net Debt 2020 12 664 M 809 M 809 M
P/E ratio 2020 5,74x
Yield 2020 3,73%
Capitalization 2 905 M 185 M 186 M
EV / Sales 2020 0,73x
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
Buy
Mean consensus BUY
Number of Analysts 7
Average target price 3,72 EGP
Last Close Price 2,68 EGP
Spread / Highest target 97,0%
Spread / Average Target 38,8%
Spread / Lowest Target -8,96%
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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