Egypt's Ezz Steel announced Thursday a 79 per cent plunge in its net profit for the first half of 2011: driven by a surge in tax and by foreign exchange losses.

Margins were squeezed to 13.3 per cent compared to 16.1 per cent during the first half of 2010, resulting in an EBITDA figure of LE1.24 billion. This was partially eased by the increase in net sales by 24 per cent to LE9.33 billion.

Net profit after tax and minority interest dropped to LE51 million ($8.5 million) from LE241 million. The drop in profitability is attributed to a $158 million deferred tax loss realised during the first quarter of 2011, largely a result of the increase in tax rate from 20 to 25 per cent. Foreign exchange losses amounted to LE66 million, the reason for which has yet to be disclosed by Ezz steel management.