GB Auto (AUTO.CA), a leading automotive assembler and distributor in the Middle East and North Africa, announced today its consolidated results for 3Q13, reporting net income of EGP 7.5 million on revenues of EGP 2,058.2 million as challenges in its home market prevented top-line growth and dampened bottom-line results.
The company reported an increase of 6.3% in 9M13 revenue to EGP 6,307.9 million, up from EGP 5,935.9 million in the same period of last year. Net income is down 50.0% from 9M12 at EGP 70.9 million year-to-date.
Management Comment
Having managed businesses through decades of challenges, there is no question in my mind that 2013 has been the toughest year the economy has ever seen,” said GB Auto Chief Executive Officer Dr. Raouf Ghabbour. “Political and economic developments in our home market in 3Q13 combined with the imposition of a strict curfew saw consumer confidence hit its nadir. The result, of course, is that our performance in Egypt was particularly hard-hit.
Having said that, we continued to invest, spending on lateral as well as regional expansions and hiring exceptional talent. Those outlays were not matched by revenue contributions and thus the significant weakening of our operating margins. This, together with the higher financing costs to fund our expansions and inventory build-up has led to a depressed bottom line.
Outlook
We are adjusting our cost base through new efficiencies, particularly in our regional operations, without sacrificing any of the flexibility we need to respond to positive domestic, regional or global developments. Moreover, sales to-date in 4Q13 and he expected payoff of our investments leave GB Auto very optimistic about the shape of the year to come — particularly the second half of 2014, as we look to the restoration of a full-time elected president and government in Egypt. Meanwhile, the financial impact of activities in Algeria and Libya will be felt soon.
