Egyptian steel producer, Ezz Steel, faced a net loss in Q1 2023 as profitability was impacted by sharp currency depreciation. According to the company’s financial statement, they posted a net loss of EGP 2.489 bln in Q1 2023, compared to a net profit of EGP 1.217 bln in Q1 2022. The net loss was largely attributed to forex losses amounting to EGP 889 mln.
Since March 2022, Egypt’s currency has undergone a significant devaluation of approximately 50pct following the economic vulnerabilities brought to light by Russia’s invasion of Ukraine.
Despite the challenging financial performance, Ezz Steel witnessed a 49pct YoY increase in net sales, reaching EGP 27.849 bln in Q1 2023. Rebar sales accounted for 55pct of total sales, while HRC sales accounted for 44pct.
In terms of exports, the company reported sales of USD 285 mln in Q1 2023, with HRC sales amounting to USD 191 mln and rebar sales reaching USD 94 mln. This marks a growth compared to Q1 2022, where exports amounted to USD 212 mln, with HRC sales totaling USD 184 mln and rebar sales amounting to USD 28 mln.
However, the group’s consolidated steel sales volumes experienced a 7pct YoY decline, totaling 1.2 mln tons in Q1 2023. This decline was driven by a 32pct decrease in local rebar sales, which reached 517,000 tons, and a 23pct decrease in local HRC sales, which amounted to 251,000 tons in the same period.
To mitigate the impact of challenging domestic conditions, Ezz Steel focused on maximizing exports to secure foreign currency for importing raw materials and consumables. In Q1 2023, they exported 285,000 tons of HRC, representing 53pct of total HRC sales, compared to only 37pct in Q1 2022. Similarly, exports of rebars reached 147,000 tons, accounting for 22pct of rebar sales, compared to just 4pct in Q1 2022.
In terms of production volumes, Ezz Steel reported a decrease of 11pct in long steel production, amounting to 716,000 tons in Q1 2023. However, flat steel production volumes increased by 19pct YoY to reach 566,000 tons during the same period.
Looking ahead, Ezz Steel anticipates a 10pct YoY decrease in domestic long and flat steel consumption in 2023 due to high inflation and currency devaluation. The company operates four fully integrated steelmaking plants in Egypt, with a production capacity of 7 mln tons for flat and long steel products.
