Global Research Egypt

Result Update
Market Data Bloomberg Code: Reuters: CMP (13 August 2009) O/S (mn): Market Cap (LEmn): Market Cap (US$mn): Price/EPS 2009e (x): Price/Bv 2009e (x): Price Performance High (LE): Low (LE): Average Volume: IRAX:EY IRAX.CA LE776.01 13.4 10,370.9 1,872.3 9.7 1.2 1-Yr 1400.0 545.0 2,935.2

Al Ezz Dekheila Steel Company Alexandria (EZDK) 1H/2009 Review

Al Ezz Dekheila Steel Company Alexandria witnessed a severe drop in its net profit in H1 2009, as it amounted to LE374.1mn, as opposed to LE1,730.0mn in H1 2008, a 78.4% decline. However, on a quarterly basis, the results of Q2 2009 show a slight incline of 1.8% in net income compared to the first quarter of 2009. The Y-o-Y plunge in the Companys bottom line stemmed from a 28.2% slump in Sales, reaching LE4.3bn in the 6M period ending June 2009, down from LE6.0bn in the same period of 2008, reflecting the intense influence of the international financial crisis. Although EZDKs COGS in H1 2009 were close to those incurred in H1 2008, the deceleration of sales resulted a higher COGS/Sales ratio from 57.5% to 79.8%, which in turn led to a lower EBITDA margin, which fell from 40.6% to 18.1%.
EZDK Interim Results % Change % change

Share Price Performance

1,600 1,400 1,200 1,000 800 600 400

(LEmn)
Revenues EBITDA Net Profit EPS

H1 2008

H1 2009

Q1 2009

Q2 2009

5,968.6 2,420.9 1,730.0 129.4

4,285.2 776.0 374.1 28.0

-28.2% -67.9% -78.4% -78.4%

2,234.6 347.8 185.3 13.9

2,050.6 428.3 188.7 14.1

-8.2% 23.1% 1.8% 1.8%

Source: Companys Financials

EZDK EGX30 Rebased

On a quarterly basis, the Companys COGS/Sales dropped from 82.5% to 76.9%, on the back of a 14.5% decrease in COGS, which exceeded the 8.2% fall in Revenues. The result was an amelioration of the EBITDA margin from 15.6% to 20.9%. Another factor that contributed to the Y-o-Y dip in net income was a 119.2% increase in interest expense, which resulted from a new LE2.3bn debt extended to the Company in 2009.
EZDK Main Balance Sheet Balances

Source: Mubasher Website

Faisal Hasan, CFA Head of Research fhasan@global.com.kw Phone No: 2295 1270 Mahmoud Soheim Manager-Egypt Research msoheim@globalinv.com.eg Phone No: (202) 37609526 Cherine Fayez Farkouh, CFA Financial Analyst cfarkouh@globalinv.com.eg Phone No: (202) 37609526

(LEmn)
Total Assets Equity
Source: Companys Financials

H1 2009

FY 2008

% Change

8,743.9 3,019.0

10,253.3 3,144.8

-14.7% -4.0%

The Companys total assets dropped by 14.7% in H1 2009, compared to year end 2008. This was mainly due to a 41.4% decline in the Companys cash.

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