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GB Auto’s overall annual sales revenues
increasedby 24.6%y-o-y inFY16 owing to
the company’s competitivepricingpower
withinan inflationary environment.
4Q16 witnessed increased pressures
relative to the three preceding quarters
where the float of the Egyptian pound
on 3 November 2016 diminished con-
sumers’ purchasing power and applied
downward pressure on demand during
the final twomonths of the year—with
volumes declining relative to the record
unit sales and strong revenues across all
divisions inOctober 2016. Nevertheless,
GB Auto closed 4Q16 with a 52.9% y-o-y
increase in sales versus 4Q15.
Operating profit grew more than
revenues, up c.40% y-o-y to LE 1.0 bil-
lion in FY16 versus the LE 742 million
posted in the previous year. However,
improved profitability was offset by
several factors, including FX losses of
LE 1.2 billion, which was a non-cash
expense recorded following the revalu-
ation of foreign currency exposure,
which stood at $106.6 million on 31
December 2016.
The Group recorded an increase in
finance cost owing to official inter-
est rate hikes (+5.5% versus last year),
reaching LE 642 million in FY16 as
well as incurring additional working
capital requirements for day-to-day op-
erations. Following the devaluation in
November and with weakened market
demand, cash levels were pressured as
the company continued to accumulate
inventory while sales were signifi-
cantly slower.
The Group’s market leadership was
successfully expanded, with GB Auto’s
market share increasing to c.36.8% for
FY16 versus 26.8% in FY15. The Group’s
netdebtstoodatLE7.5billion,anincrease
of LE 1.5 billioncompared to 3Q16.
Net debt/equity was maintained at
c.1.5x as at 31 December 2016 compared
to 1.4x at the end of September 2016.
During the quarter, total consolidated
debt increased to LE 8.7 billion com-
pared to LE 6.7 billion in 3Q16, which
includes LE 2.5 billion in Financing
Business debt as we continue to expand
our healthy financing operations.
Overall, GB Auto maintained its
strong position within the market
compared to its rivals and continues
to do so despite higher inventory lev-
els at the close of the year. We expect
to return to lower levels in the second
half of 2017, with cash flow levels set
to improve significantly.
Corporate Developments
1. GB Auto inks agreement
with Bajaj to expand Egypt
operations
GB Auto signed an agreement with
Indian two- and three-wheelers
maker, Bajaj, in 1Q16 that signaled the
commencement of work on the expan-
sion of assembly operations in Egypt.
Bajaj will be providing GB Auto with
engineering data as well as technical
expertise and assistance on the Boxer
150 and Auto-Rickshawmodels.
2. GB Auto awarded tenders
for 260 buses
During 1H16, GB Auto was awarded a
new tender from the Egyptian Public
Transport Authority to deliver 260
Management
Review and Financial
Performance
Despite the challenges faced in 2016, GB Auto reported solid
figures for the year compared to competitors, expecting to return
to normalized levels in the years to come.
2016 ANNUAL REPORT
13