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CAIRO - Ezz Steel (EGX: ESRS; London Stock Exchange (LON:LSEG): AEZD), the leading independent steel producer in the MENA region, reported a net loss for the fiscal year ending December 31, 2023, despite achieving record sales. The company's consolidated net sales soared to EGP 142,914 million, a significant increase from EGP 83,984 million in the previous year. However, a substantial foreign exchange loss of EGP 30.9 billion contributed to a net loss of EGP 717 million, compared to a net profit of EGP 6,647 million in FY22.
The company's gross profit more than doubled to EGP 39,305 million, and EBITDA also saw a similar increase, reaching EGP 35,239 million. These gains were overshadowed by the foreign exchange losses, which were primarily due to the devaluation of the Egyptian Pound and the costs associated with securing foreign currency for raw material imports.
Ezz Steel's export performance was a highlight, with a new record of $1,584 million in FY23, marking the highest for any manufacturing company in Egypt's history. Exports of hot rolled coils (HRC) and reinforcing steel bars contributed significantly to this achievement, with HRC exports alone amounting to $1,006 million.
Domestic sales, however, experienced a downturn, with reinforcing steel and HRC sales dropping by 19% and 28%, respectively, as the company prioritized exports to fund the procurement of imported raw materials and consumables.
The company's production capacity was bolstered by the steady operation of its second electric arc furnace (EAF) in Sokhna - Suez, which began in May 2023. This expansion contributed to the overall increase in production and sales, particularly for HRC.
Despite the challenging domestic market, characterized by a significant drop in steel consumption due to economic headwinds and currency devaluation, Ezz Steel's focus on export markets allowed it to mitigate a more severe production decline.
Looking ahead, Ezz Steel plans to diversify and increase its flat steel product production, with an expansion project aimed at producing hot-rolled steel plates. The company also emphasized its commitment to sustainability and reducing its carbon footprint in line with global trends.
The financial data presented in this article is based on a press release statement from Ezz Steel.
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