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Monday, 15 August 2022

GB Auto shrugs off auto sector headwinds to post 31% bottom line growth

GB Auto net income up 31% in 2Q despite market challenges: GB Auto shrugged off the multiple headwinds facing the Egyptian automotive sector in 2Q 2022, announcing yesterday that its bottom line grew by almost a third during the quarter thanks to strong consumer demand. The company posted a net income of EGP 490.5 mn during the April-June period, up 31% from 2Q 2021, despite import restrictions, the devaluation of the EGP, and inflation weighing on the sector, the company said in its latest earnings release (pdf). Revenues rose almost 8% to EGP 7.83 bn, which the company attributed to “resilient” demand and “improved pricing strategies.”

Auto revenues stable + NBFS drives growth: Revenues from the auto and auto-related segment rose 1.1% y-o-y to EGP 5.82 bn as an “optimized product portfolio,” an enhanced pricing strategy, and a move to increase inventory levels helped to offset market headwinds. Revenue growth from commercial vehicles and after-sales offset a 6.5% y-o-y fall in passenger car sales and a 33% decline in motorcycle sales. The company’s non-bank financial services arm, GB Capital, saw revenues rise 27% y-o-y to EGP 2.36 bn and doubled its net income to EGP 276.9 mn thanks in part to strong growth at MNT-Halan.

Remember: All is not well in the local car market. The local passenger car market contracted by 33% y-o-y and 32% q-o-q during 2Q due to import restrictions and a slowdown in opening letters of credit (L/Cs), GB Auto said.

Looking ahead: “In the coming period, we will remain focused on maximizing margins on the available inventory and minimizing overheads until the import situation improves,” said CEO Nader Ghabbour. “Challenging conditions are likely to persist for a number of quarters; however, we are confident in our ability to effectively respond to changing dynamics and carry forward with our growth targets once the economic situation improves,” said Ghabbour.

Ibnsina cuts full-year outlook amid challenging conditions: Ibnsina Pharma’s net income fell 48% in 2Q 2022 as the EGP devaluation, rising inflation and supply chain disruptions hit the company’s finances. The company reported a bottom line of EGP 28.4 mn compared to EGP 59 mn in 2Q 2021, while revenues declined 8% to EGP 4.93 bn, according to figures in the company’s latest earnings release (pdf). The company noted that the slide in the EGP against the greenback had a pronounced impact on costs, prompting the company to take steps to curb OPEX growth by “optimizing” expenses including salaries, electricity usage and packing.


The pharma firm’s investment arm AIM is eyeing investments in the logistics and healthcare sectors, with plans to invest in a hospital within two months, Al Borsa reports, without disclosing the size of the investment. AIM has a EGP 280 mn investment budget to make acquisitions in logistics and digital transformation, said co-CEO Mahmoud Abdel Gawad in the earnings release.

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