Back to the complete issue
Monday, 23 January 2017

EGP float impacts international companies, Savola, Schlumberger report impairment charges

The impact of the EGP float on international companies’ bottom lines is starting to show: Savola Group recorded a larger-than-expected net loss in 4Q2016 of SAR 964.3 mn (USD 257.2 mn). The company said it had to take losses in Egypt due to the EGP devaluation as well as impairment charges of goodwill, property, and equipment. Analysts surveyed by Reuters expected the Saudi food producer to make an average profit of SAR 53.6 mn in the quarter. Savola attributed the drop to lower gross profits, higher financial charges, and non-recurring items booked during the quarter.

… Similarly, oilfield services provider Schlumberger reported an attributable net loss of USD 204 mn in 4Q2016, down from USD 1.02 bn a year earlier, when it recorded USD 2 bn in restructuring and asset impairment charges Reuters reported. According to an SEC filing, Schlumberger took a USD 63 mn currency devaluation loss in Egypt. In total, the company recorded USD 536 mn in restructuring charges worldwide from costs of workforce reduction, facility closure, and other costs relating to the acquisition of Cameron International Corporation.

On a related note, we are starting to see the first glimmers of what may emerge from the revisited FY2016-17 budget, which is currently being worked on to factor in the EGP float. So far, supply subsidies expenditures have been increased to EGP 53 bn, said Supply Minister Mohamed Ali El Sheikh. The budget for supply subsidies, which stood at EGP 40 bn before the float, had been increased in December to EGP 50 bn, he tells Al Ahram. The Social Solidarity Ministry has asked the Finance Ministry to increase the budget allocated to social protection programs by EGP 1.5 to bn EGP 14 bn following the EGP float, Social Solidarity Minister Ghada Waly told Al Borsa.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt; Hassan Allam Properties (tax ID:  553-096-567), one of Egypt’s most prominent and leading builders; and Saleh, Barsoum & Abdel Aziz (tax ID: 220-002-827), the leading audit, tax and accounting firm in Egypt.