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Wednesday, 16 November 2022

So. Many. Earnings.

More robust results as we go down to the wire on earnings season: Yesterday saw another flurry of earnings releases land in our inbox, with contractors, tech, and pharma firms all posting strong results. Here’s the rundown:

ELSEWEDY ELECTRIC-

Elsewedy Electric’s revenues rose 53% to EGP 62.6 bn in 9M 2022, according to the company’s earnings release (pdf). The company’s net income after minority interest rose 35% to EGP 3.1 bn in the nine-month period. 3Q also saw strong growth, with revenues up 59% y-o-y to EGP 23.6 bn in 3Q 2022 and net income rising 71% to EGP 1.2 bn.

Wire and cables and turnkey segments drove growth: Revenues from Elsewedy’s wires and cables segment grew 52% y-o-y to reach EGP 11.3 bn during 3Q 2022. The company attributed the rise in revenues to an overall improvement in performance, coupled with price hikes and favorable FX movements. Turnkey project revenues rose 63% y-o-y to reach EGP 9.9 bn, driven by an increase in projects in Tanzania and Egypt. The two segments together contributed 90% of the company’s revenues.

Elsewedy’s contingency stockpiling efforts are in full swing: Inventory rose almost 50% to EGP 19.9 bn during the first nine months of 2022, as the company continues to build up its stock of raw materials to safeguard against global supply-chain disruptions. Elsewedy more than doubled its net debt to almost EGP 14.8 bn as of 30 September, from EGP 6.1 bn at the end of 2021, in large part due to the company’s future-proofing strategy.

FAWRY-

E-payments giant Fawry’s adjusted net income rose 25% y-o-y to EGP 179.8 mn in 9M 2022, according to the company’s earnings release (pdf). Revenues were up 37% y-o-y to EGP 1.6 bn. Revenue growth was underpinned by the strong performance of the company’s banking services segment. In 3Q 2022, Fawry’s adjusted net income rose 75% y-o-y to EGP 95.8 mn, with revenues up 37% to EGP 613.7 mn.

Fawry’s banking services drove growth: Banking services revenues were up 89% to EGP 524.4 mn in 9M 2022, with both payments acceptance and agent banking revenues nearly doubling. The acceptance business accounted for more than 22% of consolidated revenue growth for the nine-month period, “cementing its place as a major driver of Fawry’s diversification efforts,” the company said.

RAMEDA PHARMA-

Tenth of Ramadan for Pharma Industries and Diagnostic Reagents (Rameda) reported a 82% y-o-y jump in its 9M 2022 net income after minority interest to EGP 194.9 mn, according to its latest earnings release (pdf). Rameda’s top line for the nine-month period rose 28% y-o-y to almost EGP 1.1 bn on the back of strong performance in its private sales and exports.

Private sales + exports continue to underpin strong performance: Private sales — meds sold to domestic distributors to stock local pharmacies — rose 31% y-o-y, accounting for 62% of total sales volume and 74% of revenues in the first nine months of the year. Exports also registered strong growth, with sales volumes rising 161% and revenues up 28% to EGP 75.8 mn. The pharma company launched five new products during 9M 2022 — three of them in the third quarter — and is on track to launch 8-10 products for 2022 overall.

Rameda is hiking prices thanks to inflation, the deval: “In anticipation of rising inflationary pressures and the devaluation of the EGP, management was swift to respond and successfully received approvals for price hikes between c. 25-40% across products representing 65% of Rameda’s sales. These price hikes allowed us to continue delivering strong profitability margins and we will remain focused on applying for further price increases across Rameda’s portfolio to hedge against the impact of the devaluation of the EGP going forward.” CEO Amr Morsy said.

HDB-

Housing and Development Bank’s (HDB) net income rose by 27% y-o-y to EGP 549 mn in 3Q, the bank said in its earnings release (pdf). The increase was driven by a 57% growth in the bank’s interest income.

HDB’s gross loan book grew by 27% in the first nine months of the year to EGP 34.3 bn on the back of an expansion in the bank’s commercial banking activities. Deposits rose by 39% in the period to EGP 87.2 bn driven by a 47% increase in corporate deposits which accounted for most of the bank’s deposits.

What they said: “The past nine months have seen turbulent market conditions hamper the Egyptian economy, from rising inflationary pressures, global supply chain constraints, to the floatation of the EGP. However, despite a suboptimal economic backdrop, HDBK has been able to deliver on its three-pronged strategy and book growth across various fronts, thanks to its modernized business model, enhanced visibility, and focus on digitalized technology,” Chairman and Managing Director Hassan Ghanem said.

CONTACT FINANCIAL HOLDING-

Contact Financial Holding’s net income inched up to EGP 336.2 mn in 9M 2022 from EGP 330.3 mn last year, according to the company’s earnings release (pdf). Net income from the company’s financing operations rose 2% to EGP 303.5 mn on the back of a 26% rise in interest income and a 24% increase in revenues from portfolio transfer. Contact saw a 62% rise in new financing to EGP 8.3 bn. This was driven by the group’s consumer finance, commercial trucks, and mortgage products, with new lending for passenger cars also expanding despite tough market conditions. Total gross premiums written at the company’s ins. division almost doubled to EGP 724 mn on the back of new product launches and growing cross-selling.

What they said: “The impressive performance, which comes in the midst of a challenging macroeconomic environment both at home and around the world, demonstrates both our business’ resilience and our proven ability to successfully implement long-term strategies aimed at driving sustainable growth across our full product offering,” Contact’s management said.

EASTERN COMPANY-

Eastern Company’s net income dropped 12% y-o-y to EGP 1.4 bn in 1Q FY 2022-2023 (July-September 2022), the company said in its earnings release (pdf). The company’s top line rose 7% y-o-y to EGP 4.6 bn on the back of a 13% y-o-y increase in revenues from local cigarette sales.

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