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GB Auto increases car prices 3 times in November, causes temporary shock in market: Ghabbour - Daily News Egypt

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GB Auto increases car prices 3 times in November, causes temporary shock in market: Ghabbour

Sales will return to normal within a few days, says the chairperson


 

GB Auto increased the prices of its cars three times this month–on 1, 6 and 15 November–causing a temporary shock in the car market. Chairperson Raouf Ghabbour expects demand to rise again within days, according to a financial report by the company.

He explained that the company was able to cope with the new economic challenges in Egypt, particularly in the wake of the flotation of the national currency, thanks to its ability to diversify brands and obtain liquidity. GB Auto’s average car sales increased by 34%, with a 13% increase in sales.

Ghabbour expects sales of motorcycles and tuk-tuks to return to the usual high levels within three to six months. The annual sales rate of these vehicles declined by 2.2% during the third quarter (Q3) of 2016, recording EPG 499.5m.

He believes that the consumer market in Egypt will experience some unrest in this financial quarter, and probably beyond, as a result of inflation.

GB Auto recorded a good performance in Q3 of 2016 despite the economic unrest. This indicates that the company’s performance will be noticeable within the building of an economy based on sound foundations following the liberalisation of the exchange rate, the enforcement of the value-added tax (VAT), and the loan from the International Monetary Fund (IMF) to support the state’s foreign exchange resources.

Moustafa El-Mahdy, financial manager of GB Auto, said the company has strong elements that enabled it to increase revenues, most prominently the abundance of stock, repricing, and meeting customers’ demands despite the market’s difficult economic nature.

This strategy has resulted in increasing the company’s market share from 27.8% in Q1 of 2015, to its highest level of 41.5% in Q3 of 2015, El-Mahdy said.

As of the end of Q3 of 2016, the company’s net debt reached EGP 6bn, an increase of EGP 183m compared to the end of Q2 of 2015. These debts include EGP 2.2bn to the financial sector; the company seeks to increase this sector’s operations.

El-Mahdy said the recent flotation has lead to losses due to the difference in currency exchange rates; the extent of these losses will become clear during the last quarter of this year. The company endured similar losses of EGP 80.8m as of the end of September.

Beltone investment bank expects GB Auto to endure losses of EGP 150m during Q4 of 2016; total expected losses are estimated at EGP 350m.

Beltone noted that there is a possibility that GB Auto will face restrictions in acquiring hard currency due to the increase of the price of the US dollar to EGP 18 this month, which affected the dollar price at customs. This in turn could reflect negatively on sales in 2017.

Beltone, however, specified the fair value of GB Auto at the level of EGP 3.53 with a purchase recommendation amid expectations that recovery will start at the beginning of 2017.

Net profits of GB Auto declined to EGP 39.4m during Q3 of 2016, compared to EGP 102.6m in the same period last year, a decline of 61.6% due to currency losses.

Revenues of the company increased to EGP 4.321bn, compared to EGP 3.17bn in the same period last year.

 

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https://dailyfeed.dailynewsegypt.com/2016/11/26/601240/
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