By Tamim Elyan / Reuters
CAIRO: Egypt’s largest steel producer, Ezz Steel, posted a 20 percent drop in 2011 net profit on Tuesday as soaring costs and higher taxes offset a rise in sales during a year of economic and political turmoil.
An uprising ousted president Hosni Mubarak in February last year and the turmoil rocked Ezz Steel, which gets much of its business from infrastructure and real estate sectors that were plunged into crisis.
Ezz Steel’s net income dropped to LE 202 million ($33.5 million) last year, despite a 12 percent rise in net sales to LE 18.6 billion.
“The increase of corporate tax rates from 20 percent to 25 percent in Egypt weighed on net profits,” Beltone Research said in a note.
Analysts said a strong operational performance by the company’s Ezz Dekheila Steel unit helped to drive a rise in underlying profit.
Net profit before tax and minority interests rose by 33 percent to LE 1 billion.
The company said Dekheila contributed 65 percent of consolidated net sales.
Ezz Steel said its long-steel prices rose by 23 percent year on year while flat steel prices rose by 17 percent domestically and by 20 percent for export markets.
“They maintained margins by increasing prices to face the increase in raw material costs,” said Prime Research analyst Heba Sherif.
Shares in the firm fell 1.9 percent to LE 6.08 by the end of the trading session, while Egypt’s main index was down 0.8 percent.
Company founder Ahmed Ezz was hit with corruption charges last year and the group’s share price slumped to as low as LE 3.28 from above LE 21 before the uprising.
Ezz, who was a top official in Mubarak’s now disbanded political party, quit the board of Ezz Steel and Ezz Dekheila in May last year to fight the charges against him. A court jailed him in September.