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Tuesday, 16 November 2021

Earnings watch: Fawry, Elsewedy Electric, GB Auto, and Rameda

E-payments giant Fawry saw its bottom line ease 26% to EGP 36.1 mn in 3Q2021, according to its earnings release (pdf). Revenues rose 31% y-o-y during the quarter to EGP 448.3 mn.

On a nine-month basis, Fawry’s net income is nevertheless up 25% over the same period last year at EGP 149.4 mn on revenues of EGP 1.2 bn (+33%).

Banking + microfinance segments underpin revenue growth: The strong performance was driven by the company’s banking segment, which saw revenues more than double to EGP 118.3 mn in 3Q. Its microfinance services also performed well, bringing in EGP 35.6 mn, up almost 90% from 3Q2020.

Why the dip in the bottom line in 3Q? Fawry’s bottom line remains “solid” despite “aggressive spending” on marketing and human resources, it said in the release, noting that its gross and EBITDA margins improved significantly during 3Q2021 compared to the same period last year.

Fawry is getting into the BNPL game: The company’s buy now pay later platform, Fawry Consumer Finance, will launch next year and will “strengthen Fawry’s growing presence in the financial services space” and “drive further business at our acceptance segment,” CEO Ashraf Sabry said. The Central Bank of Egypt has also approved the company’s myFawry card, which it hopes to launch before the end of the year, he said. The service allows consumers to deposit and withdraw funds from anywhere across the country and it is expected to fuel the use of P2P and payout services, yielding new revenue streams for Fawry, Sabry added.

Elsewedy Electric’s net income fell 14% y-o-y to EGP 703.9 mn in 3Q2021, according to the company’s earnings release (pdf). Revenues for the quarter came in at EGP 14.9 bn, up 31% y-o-y. The company booked EGP 2.3 bn in net income in 9M2021, up 32% y-o-y, while net revenues for the nine-month period came in at EGP 40.9 bn, up 30%.

Wires + turnkey projects drive top line growth: The company’s quarterly performance was underpinned by its wires and cables segment, whose sales grew 57% to EGP 7.4 bn. Turnkey projects also saw significant growth, rising 14% to EGP 5.9 bn.

Looking forward: “Management is encouraged by the solid performance we have

delivered across our business lines … and is optimistic about Elsewedy’s growth prospects and its ability to sustain strong performance,” said CEO Ahmed El Sewedy.

GB Auto’s net income dipped 11% y-o-y to EGP 332.3 mn in 3Q2021, the company said in its earnings release (pdf). Revenues rose 34% y-o-y to EGP 8.3 bn during the quarter. GB Auto reported a 39% y-o-y increase in 9M2021 revenues on the back of “overall improved demand,” with net income for the period soaring 60% y-o-y to EGP 1 bn.

In detail: Revenues from the auto and auto-related segment grew 35% y-o-y to EGP 6.5 bn in 3Q2021, “driven primarily by healthy demand and increasing consumer purchasing power,” the company said. Despite rising sales, the segment’s bottom line dipped 21% y-o-y to EGP 185.6 mn which the company attributed to the “high base effect of capital gains in the comparable period.” GB Capital delivered 26% y-o-y revenue growth to EGP 2.1 bn, while net income inched up 4.4% y-o-y to EGP 146.3 mn.

Looking forward: GB Auto also sees strong demand in the auto sector continuing to drive its performance through the end of the year and “offset the impacts of anticipated supply chain disruptions,” said CEO Nader Ghabbour. The company plans to continue expanding its fintech product offerings through GB Capital to capitalize on Egypt’s “thriving” fintech market, he said. The company is also working on finding substitutes to tuk-tuks following the Madbouly government’s decision to ban imports of the three wheelers’ components, Ghabbour said. GB Auto currently has 3-6 months of tuk-tuk inventory to clear out, giving it some breathing room while it searches for substitutes, board member Mansour Kabbani told us earlier.

Tenth of Ramadan for Pharma Industries and Diagnostic Reagents (Rameda) reported an 82% y-o-y increase in 3Q2021 net income to EGP 45.3 mn, according to the company’s earnings release (pdf). Revenues for the quarter grew 34% to EGP 314.7 mn, buoyed by sales growth across all of Rameda’s segments. Net income in the first nine months of the year rose 56% to EGP 107.1 mn on revenues of EGP 852.5 mn, up 27% from the same period in 2020.

What’s driving growth? Private sales accounted for more than two-thirds of the company’s overall revenues, rising 26% to hit EGP 587.2 mn on the back of heightened demand for antivirals and antibiotics as well as the continued normalization of the market post-covid. Tender volumes fell by almost a quarter in line as Rameda reduced their contribution to sales but revenues still managed to increase 3%, accounting for 18% of its top line.

Rameda’s growing nutraceuticals portfolio is expected to drive short- and long-term growth, CEO Amr Morsy said, pointing to “the spread of covid-19 and its various strains, the MENA region’s high prevalence of lifestyle diseases and the general increase in consumption of natural health and wellbeing products by more health-conscious consumers.” The company is expecting to launch another four products before the year is out, three of which fall under the “lucrative” nutraceutical sub-segment, according to Morsy.

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