Egypt’s Ezz Steel said on Wednesday it posted a Q3 net profit, reversing a loss in the same quarter a year ago and forecast that growing steel demand would push prices higher in 2011.
Egypt’s largest steelmaker Q3 a net profit was LE 1.65 million — beating analyst forecasts — compared with a loss of LE 67 million in the same quarter a year earlier.
A Reuters poll of six analysts forecast Ezz Steel to report a Q3 net loss at LE 20.3 million, with estimates ranging from a net loss of LE 60 million to a net profit of LE 7 million.
Ezz Steel said an improvement in demand boosted margins in the quarter. Its upbeat forecast comes against a backdrop of strong domestic demand, fuelled by house building and new infrastructure and better steel prices.
"An improvement in prices in the fourth quarter, combined with a reduction in volatility, are both positive signals for our 2011 outlook," Paul Chekaiban, Ezz Steel’s managing director, said in a statement.
Analysts said steel rebar demand had remained relatively resilient in Egypt because of the need for housing and government infrastructure spending.
"The demand for steel products in the Egyptian market continues to remain at very high levels. This is derived primarily from construction growth and the restart of infrastructure projects," the company said in a statement.
Ezz Steel added that production at its new facilities would boost results going forward. It said last year it was investing $475 million to set up a new billet production line and a DRI plant.
Net sales for the quarter rose 36.3 percent year-on-year to LE 4.1 billion. Nine-month net profit was LE 242 million, up from LE 29 million in the same period a year earlier.
