Dec 19, 2016: Qalaa Holdings, an African leader in energy and infrastructure, has reported revenues of EGP1.79 billion ($98 million) in the third quarter (Q3) of 2016 with the largest contributions coming from the energy (45 per cent) and cement (32 per cent) sectors.

The company also reported a consolidated net loss after minority interest of EGP207.6 million. The 21 per cent year-on-year improvement in revenues was largely attributable to a 25 per cent increase in Taqa Arabia revenues and 27 per cent increase in Asec Holding revenues.

Comparative 2015 figures are adjusted to reflect the divestment of ASEC Minya, ASEC Ready Mix, MisrQena Cement, Rashidi El-Mizan, RIS, Tanmeyahand Mashreq, eliminating the figures of divested companies in addition to figures of investments held for sale starting 1Q16, including Africa Railways. Additionally, ASCOM’s 2016 results were added to Qalaa’s 2015 figures, owing to ASCOM’s income statement consolidation starting 3Q15, for a more accurate comparison of year-on-year results.

“Qalaa’s performance during the third quarter continues to reflect the resilience of its subsidiaries in the face of an increasingly challenging operating environment,” said Qalaa Holdings chairman and founder Ahmed Heikal. “Our top-line improvement in 3Q16 was driven primarily by our energy and cement assets, exemplifying the prudence of our strategy to shed non-profitable investments while focusing on our proven winners.”

“Like all businesses operating in Egypt, Qalaa and its portfolio companies will be affected by the recent economic policies rolled out by the Egyptian government. With the long-awaited float of the pound now behind us and as the government continues to make headway in cutting back energy subsidies, we are increasingly optimistic about the direction the economy is headed today,” Heikal added. “We see these critical steps unlocking significant opportunities across the industries in which we operate.”

Energy distribution subsidiary Taqa Arabia will also capitalize on fuel subsidy cuts with higher prices at the pumps pushing margins for the company’s marketing arm. Meanwhile, Qalaa’s mining platforms, ACCM and Glassrock, will benefit from the float as both companies export the bulk of their production, and Nile Logistics will become a more economical alternative for road transport of goods as trucking rates are expected to rise significantly on the back of higher fuel costs.

EBITDA for the quarter came in 32 per cent lower with EGP 85.7 million, down from EGP 125.9 million in3Q15, on the back of cost increases across the board, a result of the significant devaluation of the EGP and the prevailing inflationary environment drawing raw material and feedstock prices up for Qalaa’s subsidiaries.

The company is implementing cost-cutting strategies and working towards managing foreign currency risk at both the subsidiary and Qalaa Holdings levels.

FX gains came in at EGP19.9 million in 3Q16, a reversal of last year’s loss of EGP5.1 million. Discontinued operations recorded losses of EGP101.3 million in 3Q16, 83 per cent of which are related to Africa Railways. Net Loss after Minority Interest stood at EGP 207.6 million in 3Q16, compared to the 3Q15 loss of EGP135.7 million.

“Our primary focus over the coming period will be to manage our foreign currency risk particularly with regard to our USD-denominated debt at the Qalaa Holdings level,” said Qalaa Holdings co-founder and managing director Hisham El-Khazindar.

“In that regard, Qalaa will continue to push forward with its divestment strategy, with a focus on exiting assets that would generate USD-denominated proceeds to be channeled towards debt repayment at both the holding and platform levels,” El-Khazindar added.

Source: TradeArabia News Service

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