Egypt's Ezz Steel reports a Sharp Fall in its Earnings for H1 2019

Egyptian steel major, Ezz Steel has reported a sharp fall in its earnings pressured by a sustained fall in the price of steel products and a rise in costs of iron ore pellets.

For the six months ended 30 June 2019, company's earnings (EBITDA) fell 81% to EGP 659 million and sales rose 2% EGP 25.9 billion. Ezz Steel's management said that "while again showing the operational efficiency of our plants along with the steel sector globally, we continued to suffer from the falling price of steel products and the rising costs of iron ore pellets. This pressure was increased by the exceptionally high costs of funding and energy in Egypt."

In terms of sales, in the first-half of the year, company's sales volumes increased by 8% to 2.5 MnT with long sales up 14% to 1.98 MnT but flat sales down 9% to 550,000 tonnes. Consolidated net sales for long, flat and other products in first-half rose 2% to EGP 25.9 billion (USD 1.59 billion).

The company said that the rise was due to long sales increasing 8% to EGP 20 billion which was partly offset by a fall in flat sales of 16% to EGP 5.58 billion. However, the decline in flat sales was particularly evident in the domestic markets. In terms of prices, the same declined across both long and flat steel, as well as in Egypt and the international market, during the first half of 2019.

Egypt is home to about 27 operations that re-roll billet into rebar. Egypt has capacity for about 13.5 MnT per year of rebar while its billet capacity is about 12 MnT. The country has recently re-imposed tariffs on the billet and rebar imports which may provide some boost to the steel demand of the local manufacturers.