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Ezz Steel to turn profitable by Q2-Q3, if strong market conditions continue - Daily News Egypt

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Ezz Steel to turn profitable by Q2-Q3, if strong market conditions continue

Company hopes to produce 1.8m tonnes of flat steel, between 3m-3.5m tonnes of rebars in 2021


The management at leading Egyptian steel producer, Ezz Steel, has revealed that the company may turn profitable by the second or third quarter (Q2 or Q3) of 2021.

The profitability will, however, be subject to the current strong market conditions continuing.

The management also said that it is hoping to manufacture 1.8m tonnes of flat steel and between 3m – 3.5m tonnes of reinforcing bars (rebars) in 2021. This needs to be confirmed depending on demand in the following months.

At the same time, it believes that 2021 will see the company’s financials improve in terms of managing the working capital and its related ratios. They are currently selling a large portion of their production on a cash basis, and do not have issues with collection.

The company had planned to manage their debt over three phases. Phase one saw the conversion of most of its debt to the 8% initiative, which they succeeded in achieving in Q4 of 2020. Phase two involved the restructuring of the whole group’s debt balance, with the exception of EZDK, which has also been completed. Phase three will see a restructuring of part of EZDK’s working capital facilities.

Regarding the local rebar market, the management has seen demand increasing since October 2020. This comes as the six-month ban on construction activity came to an end, with the ban having caused stock-piling by wholesalers.

The stock-piling gives the management confidence that volumes will return to at least 2018 levels, which are at least about 400,000-500,000 tonnes above 2020 consumption levels.

Due to the rising demand and increasing global steel prices, the company and the Egyptian steel market have been able to pass down to consumers the inflating raw material costs, relating to iron ore and scrap.

As a result, Ezz Steel has gained a small margin through successive price increases totalling EGP 3,500/tonne. This implies an increase of about 35% to EGP 13,654/tonne, including 14% VAT, in Q4 of 2020 alone. This was preceded by an EGP 550/tonne increase in Q3 of 2020.

Topics: Ezz Steel

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https://dailyfeed.dailynewsegypt.com/2021/02/09/ezz-steel-to-turn-profitable-by-q2-q3-if-strong-market-conditions-continue/
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