· revenues decline in 2019 in spite of2.7-fold growth in core business lines
· Cautious outlook for 2020 as Egytrans focuses on business continuity in COVID environment
Cairo, Egypt – April 6th, 2020: Egytrans, a leading transport and logistics company, announced their annual results for FY19 showing a decrease in revenues of 11.1% Y-o-Y reaching EGP 247 million, in spite of the increased work resulting in a 2.7-fold growth in the company’s core businesses. “Looking back at this year, 2019 saw a multitude of global economic growth disruptors from the escalation of the trade war and Brexit to name just a few as a consequence of which global trade growth has almost come to a standstill, The Egyptian economy, like other markets around the world, have felt the impact from the ongoing turmoil especially in the transport and logistics sector” stated Abir Leheta, Chairman and Managing Director of Egytrans.
Consolidated revenues, for 2019, reached EGP 247.0 million, representing a decrease of 11.1% Y-o-Y. As a result, net profits after taxes for the year declined by 23.8%, reaching EGP 31.9 million down from EGP 41.8million, registering a net profit margin of 12.9% vis-a-vis a margin of 15.0%in 2018. This was mainly due to a decline of 34.0% in investment income coupled with a 90% drop in net interest income mainly as a result of booking FX losses due to the EGP appreciation against the USD. This decline in Net Profits was mitigated by a significant 2.7-fold increase in revenues from other lines of business, our continued emphasis on cost and cash discipline, in addition to a three-fold decrease in annual taxes.
Group net operating profit margin showed marginal decline from 15.5% recorded in 2018 reaching 14% in 2019 mainly as a result of the increase in SG&A/revenues ratio from 13.0% to 15.0%. This was despite the slight improvement in cost/revenues ratio from 71.5% in 2018 to 71% in2019. We are particularly pleased with the progress we’ve made in DSO, which in2019 averaged 84 days down from 97 in 2018, leading to significant improvements in Accounts Receivable.
Egytrans share price, has followed the general volatility of the EGX, as such it has appreciated starting the year with EGP 8.12, reaching a high of EGP 9.47followed by a decline in line with the general slump of the EGX as a result of the emerging market crisis dropping to EGP 5.60 and finally closing the year with EGP 7.19.
With the current events, and the resulting slow down in logistics and transport, Egytrans focus, during the AGM, which took place online using the newly launched EGX portal, was on the imminent issue of safeguarding their employees and a well-structured business continuity management(BCM) plan to help mitigate the effects of COVID on their business operations and dealings. According to Leheta the basic principle of BCM plan is based on resource parallelism “… which means that our resources are protected and mirrored several times over. In this way, we can guarantee our readiness for delivery, storage abilities, human resources and knowhow when some areas of our business activities are severely affected and helps us maintain our operability in an emergency with tolerable downtimes – to the advantage of our customers, business partners and employees.”
Outlook for 2020 is cautious, in light of the uncertainty of the impact of COVID according to Leheta , it is difficult to put clear estimates on time and level of impact stating that the “ situation is fluid” but that their estimates were cautious because of several factors and uncertainties that could impact results, including the coronavirus, trade issues and negotiations and the impact of the IMO regulations.” Our current model is built on an expectation that the logistics and transport industry will continue to face slowdowns as centers of production close. This will impact players in the market and pricing “says Leheta.
In spite of this, Leheta is optimistic that the market would improve as early as the quarter three with an expected sharp rebound and rise in prices due to capacity shortages as production is reestablished as consumer confidence drives healthy demand in Q4 when inherent growth drivers will establish. “Fortunately,Egypt’s economic growth has almost always relied on strong domestic demand supported by both private and public consumption” says Leheta “driving with it avast demand for logistics and transportation services”
Despite its market size and opportunity to disrupt, logistics is still a business with immense potential. Looking forward, the market is projected to reach a value of US$ 1,374 Billion by 2023, registering a CAGR of 7.3% during 2018-2023. As logistics is an important factor for economic growth, governments around the world have established policies that promote its growth. In Egypt the logistics expenditure is expected to cross USD 50 billion by 2024.
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About Egyptian Transport and Commercial Services Company (Egytrans):
The Egyptian Transport and Commercial Services Company(Egytrans) is a leading integrated transport and logistics company with a comprehensive portfolio of services in Egypt. With experience dating back to 1939, the company was established in 197under the name Egytrans. It has since developed a number of subsidiary and affiliate brands consisting of Egytrans Depot Solutions (EDS), EgyptianTransportation & Logistics S.A.E. (ETAL), Wilhelmsen Ships Service Egypt and Scan Arabia. Working across 9branches in Egypt, the mission of Egytrans is to make integrated transport easy, safe and cost-effective. Egytrans enables and facilitates global and national supply chains through its extensive range of services including SeaFreight, Air Freight, Land Transport, Customs Clearance, ProjectLogistics, Exhibitions, and Storage. Egytrans employs around 350 employees across its operations in Egypt and is publicly traded on the Egyptian StockExchange (EGX) as [ETRS.CA] for Reuters and [ETRS EY Equity] for Bloomberg. For more information please visit: ir.egytrans.com
Forward Looking Statements
Statements contained in this document that are not historical facts are based on current expectations, estimates, projections, opinions and beliefs of Egytrans. Such statements involve known and unknown risks, uncertainties and other factors; 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 Egytrans may differ materially from those reflected or contemplated in such targets or forward-looking statements. The performance of Egytrans is subject to risks and uncertainties. Various factors could cause actual results to differ materially from those expressed or implied by the forward-looking statements in this document including worldwide economic trends, the economic and political climate of Egypt, the Middle East and changes in business strategy and various other factors.
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