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Thursday, 1 October 2020

Qalaa losses deepen in 2Q2020 despite strong ERC revenues

EARNINGS WATCH- Qalaa Holdings reported a net loss of EGP 712.1 mn in 2Q2020 compared to EGP 224.5 mn in the same period last year, according to the company's earnings release (pdf), on the back of low fuel prices and the covid-19 pandemic. The losses were driven primarily by the Egyptian Refining Company (ERC) “on account of covid-19 and overall soft oil markets with consequent pressure on heavy fuel oil and diesel spreads,” the company said. This comes despite Qalaa more than doubling its quarterly revenues to EGP 7.4 bn from EGP 3.5 bn in 2Q2019.

Top line growth was driven by the ERC, which brought in EGP 4 bn during the quarter. ERC began operations at its Mostorod petrochemical complex last year and inaugurated the facility earlier this week. Removing the ERC from the equation, Qalaa’s revenue would have fallen 4% on 2Q2019. “Whilst our top-line witnessed significant growth on account of the ERC’s maiden contribution, our revenue excluding the refinery’s share recorded only a marginal 4% decline which, in management’s view, is a commendable achievement given the unprecedented global challenges,” Chairman Ahmed Heikal said. “This was supported by the breadth of our diversified portfolio and ability to unlock value from strategic sectors.”

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