GB Auto sees 2010 net up on recovery
Cairo, October 18, 2010
GB Auto, Egypt's biggest listed automobile assembler, expects 2010 net profit to rise more than 50 per cent year-on-year as sales pick up after global financial turmoil deterred many buyers during most of 2009.
The automotive sector in Egypt, the Arab world's most populous country, was hit last year by the downturn but demand has started to pick up, helped in part by a government plan to offer affordable vehicles for taxi drivers to buy.
"This year, we would have a very remarkable growth in terms of net earnings compared to last year, reaching over 50 per cent," chairman and CEO Raouf Ghabbour said at the Reuters Middle East Investment Summit in Cairo. "Consumer confidence was really shaken late 2008 and 2009. This is behind us now, and consumer confidence is back."
GB Auto posted a 2009 net profit of EGP201.4 million ($35.33 million). The firm plans to export buses to the Middle East and North Africa (Mena) region, as well as eastern and western Europe.
"We plan to export buses starting the beginning of 2011. We will initially target in 2011 the markets of the MENA region. In 2012, we are looking at black Africa, 2013 at Eastern Europe including Turkey, and 2014 we are looking at Western Europe."
"In 2010, we expect the market in Egypt to close at the same levels of 2008, the pre-crisis level, which is 25 per cent growth compared to 2009," Ghabbour said.
GB Auto manufactures, assembles, imports and distributes vehicles for Hyundai Motor, Bajaj Auto, Mitsubishi Motors Corp, Volvo AB and Mazda Motor Corp. It is also looking into partnering with Chinese and Indian auto manufacturers.
"We see the recovery happening, and next year we are forecasting growth of 10 to 15 per cent in passenger cars, which will definitely take the market to volumes not ever seen before," Ghabbour said.
Egypt's younger population growth means about 75,000 cars were added to the market each year, he said.
The taxi replacement programme, which aims to scrap around 50,000 taxis by year-end, has helped auto firms emerge from the savage downturn by replacing grimy, rickety black and white taxis with new, locally assembled models.
GB Auto captured a 64 per cent share of taxi replacements in September, up from 52 per cent in the beginning of the year. The company began selling vehicles in Iraq in mid-February, opening a new market in the Middle East, with sales amounting to 2,500 vehicles per month.
"Iraq is very satisfying... and the market is very active there," Ghabbour said. Sales in Iraq would reach about 30,000 vehicles in 2010.
The firm will ramp up production this year to meet growing domestic demand, boosting passenger cars output to more than 80,000 vehicles per year from about 30,000 now. – Reuters