QALA FOR FINANCIAL INVESTMENTS Solid performance reflects the success of Qalaa's robust operational and growth strategies across its subsidiaries. Furthermore, improved refining margins at ERC along with a turnaround in market conditions and global surge in commodity prices, benefitted the Group's consolidated performance during the quarter.
Thursday, June 30, 2022
Key Operational Highlights
• ERC results were primarily supported by a recovery in refined petroleum product prices coupled with an increasing gross refining margin;
• TAQA Arabia's solid top line results reflect strong performance at TAQA Marketing and were further supported by higher power distribution volumes at TAQA Power and volume growth at TAQA Gas;
• ASEC Holding's growing revenues were driven by a strong performance in Al-Takamol Cement, which accounted for 76% of the company's revenue;
• National Printing saw improved volumes and capitalized on higher prices at all its companies. El Baddar state-of-the-art facility delivered substantial volume growth despite not operating at full capacity yet;
• Dina Farms Holding's revenue grew year-on-year as ICDP's volumes benefitted from improved post-Covid-19 market conditions and its direct distribution strategy;
• Citadel Capital Transportation Opportunities II (CCTO-II), which consolidates the company's transportation and logistics in Egypt and South Sudan, saw its revenues increase year-on-year on account of a strong performance at Nile Logistics. In 1Q22, Nile Logistics underwent a restructuring and settled all outstanding bank debt.
• Moving forward, the Group will continue focusing on exports to benefit from the commodity cycle and leverage the advantage available to local manufacturers as global logistic costs continue to surge;
• The Group's export proceeds recorded c. USD 30.2 million in 1Q22, while local foreign currency revenue recorded c. USD 852.7 million;
• Despite strong performances throughout the quarter, the EGP-Dollar currency movement, which took place towards the end of 1Q22, led to an FX loss of EGP 1.2 billion and consequently a net loss after minority of EGP 584.1 million;
• Without the one-off FX loss, Qalaa would have recorded a profitable quarter;
• Finalizing debt restructurings at Qalaa Holdings and ERC remains a top priority;
• Qalaa will continue to push forward its growth strategies across platforms, with a focus on making incremental investments in existing companies whilst remaining vigilant regarding potential acquisition opportunities that further advance the Group;
• Management is confident in the fundamentals of the Egyptian economy and its ability to capitalize on shifting global macroeconomic dynamics;
• We expect the same macroeconomic global trends to prevail during 2Q22 leading to even stronger second quarter results.
Qalaa Holdings, a leader in energy and infrastructure (CCAP.CA on the Egyptian Exchange, formerly Citadel Capital), released today its consolidated financial results for the first quarter ended 31 March 2022. The Group recorded a 134% y-o-y increase in revenues to EGP 18.7 billion in 1Q22 and recurring EBITDA of EGP 3.9 billion compared to EGP 90.5 million in 1Q21. The solid performance reflects the success of Qalaa's robust operational and growth strategies across its subsidiaries. Furthermore, improved refining margins at ERC along with a turnaround in market conditions and global surge in commodity prices, benefitted the Group's consolidated performance during the quarter. At Qalaa's bottom-line, the Group booked a net loss of EGP 584.1 million in 1Q22 compared to a net loss of EGP 478.6 million in the same quarter the previous year.
Excluding ERC, Qalaa's revenues grew by 28% y-o-y to EGP 5.0 billion in 1Q22, driven by improved performances across all its subsidiaries. TAQA Arabia's revenue grew 13% y-o-y during the quarter to EGP 2.3 billion. Revenue growth was primarily driven by increased fuel sales at TAQA Marketing and further supported by higher power distribution volumes at TAQA Power as well as CNG stations expansions and CNG volume growth at TAQA Gas.
National Printing delivered a 69% y-o-y top line increase in 1Q22 as it reaped the rewards of its new El Baddar state-of-the-art facility. Higher export volumes and an optimized pricing strategy at both Shorouk and Uniboard reflected positively on National Printing's results during the first quarter of the year. Meanwhile, ASEC Holdings' revenues reached EGP 1.0 billion in 1Q22, up 46% y-o-y, driven by a strong performance at Al-Takamol Cement.
Additionally, ASCOM delivered 24% y-o-y top-line growth in 1Q22 to EGP 286.4 million supported by increased volumes and higher prices at ACCM. Dina Farms Holding's recorded EGP 275.8 million in revenues, up 9% y-o-y, driven by strong performance at ICDP characterized by increased sales volumes, lower return rates and zero discounts during the quarter. Finally, Nile Logistics Holding delivered a turnaround performance with revenues increasing 92% y-o-y to EGP 93.6 million in 1Q22.
"Following a year during which our Company showcased resilience and agility in the face of shifting macroeconomic dynamics, we headed into 2022 well-equipped to navigate the new operating environment," said Qalaa Holdings' Chairman and Founder Ahmed Heikal. "The Group delivered a remarkable 134% year-on-year top line growth in the first quarter of the year. Our robust investment and growth strategies led to positive performances across Qalaa's subsidiaries."
"Heading into the first quarter of the year, significant inflationary pressures persisted and monetary tightening around the world was well underway. In this environment local manufacturing continues to gain support and pricing power is shifting to producers across all sectors, trends that favor companies
like Qalaa Holdings. We have successfully navigated and capitalized on the prevailing environment, benefiting from higher capacity utilization at our manufacturing businesses and leveraging our pricing advantage to grow exports. Meanwhile, tight energy markets drove ERC's performance with higher product prices and a recovery in refining margins," said Heikal.
"In the coming year, we will continue to push forward our growth strategies across our platforms, with a focus on making incremental investments in our existing companies whilst remaining vigilant regarding potential acquisition opportunities. We believe the private sector will be encouraged to take equity position in state owned companies. Furthermore, I am confident in Qalaa's strong fundamentals and ability to navigate ongoing resource constraints and supply chain shortages. Our portfolio of companies is now better equipped than ever to operate in this new reality, which we expect to prevail for a number of years ahead. Nonetheless, the Egyptian government is steadfast on expanding local production, agriculture and service sectors whilst leveraging the expertise of the private sector. Qalaa is pleased with the progress thus far and looks forward to capitalizing on this support to further grow its investments in multiple sectors."
"With regards to our financials, management adheres to the auditor's guidance; however, auditors review historical performance rather than future performance. It is important to note that the true value of Qalaa's performing assets is masked due to the adoption of international accounting standards, which account for assets at their historical value and adjust for impairments without considering revaluation adjustments," Heikal added.
Qalaa's recurring EBTIDA increased substantially to EGP 3.9 billion in 1Q22 compared to EGP 90.5 million in 1Q21. Profitability was primarily supported by ERC's positive performance during the quarter. Excluding ERC, Qalaa's recurring EBITDA growth in 1Q22 was driven by improved profitability across all of the Group's subsidiaries.
"Qalaa carried forward the positive momentum from 2021 into the new year to deliver higher revenues and EBITDA across every platform. The remarkable performance was achieved despite a highly uncertain macroeconomic environment and a multitude of shifting dynamics throughout the quarter. Across the Group's subsidiaries, first quarter results were driven by higher prices and export volumes. In addition to ERC's strong contribution, TAQA Arabia benefitted from increased fuel revenues at its marketing division, higher power distribution volumes at TAQA Power as well as CNG stations expansions and CNG volume growth at TAQA Gas. Meanwhile, National Printing reaped the rewards of its new El Baddar state-of-the-art facility, higher export volumes and an optimized pricing strategy. Finally, ASEC Holdings capitalized on an exceptionally strong performance at Al-Takamol Cement," said Hisham El-Khazindar, Qalaa Holdings' Co-Founder and Managing Director.
"In terms of profitability, Qalaa's recurring EBITDA excluding ERC recorded a 120% y-o-y increase to 783.4 million in 1Q22, driven by improved profitability across all of the Group's subsidiaries. The Group's performance was further supported by management's prudent pricing and cost-cutting strategies, operational efficiencies and restructuring efforts across platforms."
"Furthermore, the Group's profitability was greatly supported by contributions from ERC, which recorded a stellar quarter driven by a recovery in refined petroleum prices and an increasing gross
refining margin. On the debt restructuring front, finalizing Qalaa Holdings' and ERC's debt restructurings remain key priorities for us."
"Our performance in the first quarter of the year is a testament to our commitment to drive growth and ability to push ahead in the face of a testing operating environment. We look forward to another quarter of growth and strong results across our operations and markets." concluded El-Khazindar.
Qalaa Holdings' full business review for 1Q 2022 and the financial statements on which it is based are now available for download on ir.qalaaholdings.com.
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Previous Qalaa Holdings press releases on this subject and others may be viewed online from your computer, tablet or mobile device at qalaaholdings.com/newsroom
Qalaa Holdings (CCAP.CA on the Egyptian Stock Exchange) is an African leader in energy and infrastructure. Qalaa Holdings builds responsible and sustainable businesses that add value to the economies and societies in which it does business. Formerly known as Citadel Capital, Qalaa Holdings controls subsidiaries in industries including Energy, Cement, Agrifoods, Transportation & Logistics, Mining and Printing & Packaging. To learn more, please visit qalaaholdings.com.
Forward-Looking Statements
Statements contained in this News Release that are not historical facts are based on current expectations, estimates, projections, opinions and beliefs of Qalaa Holdings. Such statements involve known and unknown risks, uncertainties and other factors, and undue reliance should not be placed thereon. Certain information contained herein constitutes "targets" or "forward-looking statements," which can be identified by the use of forward-looking terminology such as "may," "will," "seek," "should," "expect," "anticipate," "project," "estimate," "intend," "continue" or "believe" or the negatives thereof or other variations thereon or comparable terminology. Actual events or results or the actual performance of Qalaa Holdings may differ materially from those reflected or contemplated in such targets or forward-looking statements. The performance of Qalaa Holdings is subject to risks and uncertainties.
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Qalaa Holdings SAE published this content on 30 June 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 July 2022 08:42:05 UTC.
