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GB Auto Q2 profit falls, bullish on summer season

Egypt's biggest listed automobile assembler witnesses a fall in profits due to political upheaval

Reuters, Monday 8 Aug 2011
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GB Auto, Egypt's biggest listed automobile assembler, said its second-quarter net profit fell 35 per cent from a year earlier as political turmoil took its toll, though the summer high season looked promising.

The company posted second-quarter net income of 50.5 million Egyptian pounds ($8.5 million) on Monday. The figure compared with a forecast by investment bank Beltone Financial for 40 million pounds.

Egypt's business sector is struggling to recover from the disruption that followed the ouster of former president Hosni Mubarak, and from the collapse of some of the country's main sources of foreign exchange, including tourism and foreign investment.

"It is rare to have the opportunity to manage a company through a revolution, and rarer still to post year-on-year growth in key lines of business despite one," GB Auto Chief Executive Raouf Ghabbour said in a statement.

He added that third-quarter figures indicated that the summer high season would record bottom-line growth of about a full multiple quarter-on-quarter.

"We have less visibility on the fourth quarter, where we see some risk to consumer and corporate sentiment as a result of contests in the political arena," Ghabbour said. "A smooth electoral process would only fuel the recovery in consumer sentiment."

Egypt's parliamentary elections are expected in November, and a presidential vote is due afterwards, but no date has been set yet.

Revenue in the second quarter rose 6.8 per cent year-on-year to 1.86 billion pounds, higher than Beltone's estimate of 1.7 billion.

Passenger car sales revenue in the quarter rose 6 per cent year-on-year to 1.38 billion pounds. Passenger car sales in Egypt represented 45 per cent of total revenue in the second quarter, while sales in Iraq came in at 29.5 per cent.

Motorcycle and three-wheeler sales were one of the least affected segments by the political turmoil, with revenue jumping 79 per cent to 239.5 million pounds.  

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