

solid performances as the Passenger Car and Motorcycle &
Three-Wheeler businesses recover. In addition, management
continues to place emphasis on efficiency and operating
in a resourceful manner. Management expects to see the
Automotive Directive, a legislation that aims to benefit local
assemblers and open up new opportunities for GB Auto and
other local producers, finalized before the end of 2017.
In the Passenger Car segment, management acknowledges
the downside risk to the line of business due to the f loat of the
Egyptian pound and how the move has impacted consumer
demand. As it did throughout 2016, GB Auto plans to continue
formulating cost-cutting schemes and pricing policies that
will preserve margins and allow the company to leverage
its leading market position and capitalize on the long-term
upside. We also believe consumers will soon adapt to the new
price realities and expect demand to pick up and return to
close-to-normal sales levels before the end of the year.
Motorcycles and Three-Wheelers are anticipated to make an
even faster recovery thanPassenger Cars as the segment serves
consumer demand for transportation. Performance is expected
tobegin topickup starting 2Q17.
We are strong believers in the Commercial Vehicles & Con-
struction Equipment line of business due to the ramp-up in
investments in infrastructure development in Egypt and the
government turning its attention to transport demand. GB
Auto secureda leadershipposition in the city and intercity seg-
ments in 2016 with several successful deliveries throughout
the year. GBAuto is also set to benefit fromthe steady recovery
in tourismafter having to re-penetrate themarket in 2016.
The After-Sales division is one that has come into particular
focus during the year, having performed exceptionally well
as customers maintain their current vehicles through GB
Auto’s network amid concerns about the price of replacement
vehicles. The segment is expected to continue providing a
cushioning against hits taken by other lines of business and
boosting the company’s profitability in 2017 and beyond.
TheTiredivisionshouldalso see anuptickgoing forward,with
solid performance seen in 2016 despite strained foreign cur-
rency supply. GB Auto introduced inMay its own brand Verde,
added representations such as Double Coin andWestlake, and
extended its business cooperation with ZC Rubber, proving
that it remains committed to the segment and plans to expand
its tire supply and boost brand representations in the future.
Meanwhile, our Financing Business is expected to continue
outperforming in the coming year after having delivered
strong results in FY16 that boosted the company’s profitability.
GB Auto continues to take a measured approach to its Regional
activities, opting for long-term growth rather than short-term
payoffs. In Algeria, it is adjusting to regulatory reforms to see
operations ramp-up, with tire representations being received
well. The Iraqimarket continued to be pressured into 2017, hav-
ing experienced turbulentmarket conditions throughout 2016.
It is likely turmoil will remain a feature of themarket for some
time, but private-sector actors who stay the course will be ide-
ally positioned to benefit froma potential turnaround.
Finally, we note that guidance going forward remains subject
to change in light of f luctuating regional geopolitical and
macroeconomic conditions as well as the ongoing foreign
exchange and local currency challenges in Egypt.
Y-o-Y Increase in Group
Revenues
24.6
%
Group Gross Profit by Year
(LE million)
1,170.3 1,581.7
2,202.1
1,603.9
1,071.6
2012 2013 2014
2016
2015
2016 ANNUAL REPORT
15