Qalaa Holdings returned to the black for the first quarter since 2018 in 2Q 2022 on the back of record revenues driven by improved refining margins at the Egyptian Refining Company (ERC). The company generated a net income of EGP 361.6 mn during the April-June quarter, compared to EGP 401.5 mn in losses last year, after revenues soared to almost EGP 27 bn, up 165% on 2Q 2021, according to its earnings release (pdf).

In detail: ERC’s revenues tripled y-o-y to EGP 21.5 bn, driven by improvement in refined petroleum product prices and an increasing gross refining margin, contributing c. 80% to total revenues. Operations experienced no slowdowns or shutdowns during the quarter. Qalaa subsidiary TAQA Arabia’s revenues rose 13% y-o-y to EGP 2.5 bn, driven by a strong performance at TAQA Petroleum, higher power distribution volumes at TAQA Power, and volume growth at TAQA Gas.

Looking ahead: “Qalaa’s results are vulnerable to FX changes owing to Qalaa’s sizable USD-denominated debt,” said co-founder and managing director Hisham El Khazindar. “Consequently, any further depreciation in the [EGP] may impact the group’s results.” The company’s debt restructuring efforts are progressing and remain a priority, he said, noting that ERC is in negotiations with its lenders for a full debt restructuring.