By Reuters
CAIRO: Egypt’s GB Auto, the top passenger car importer and distributor in the Middle East and North Africa, will reduce reliance on its Egyptian operations and its exposure to a potential currency crisis, the company’s chief executive said.
A year of political and economic turmoil since a popular uprising in Egypt sent inward investment and tourism slumping, depleting foreign reserves. Many economists believe a currency devaluation is inevitable.
“The sales revenue of GB Auto is destined to become much less reliant on the Egyptian operation,” CEO Raouf Ghabbour said on a conference call on Wednesday.
The firm, Egypt’s biggest listed automobile assembler, this week reported an 8 percent rise in fourth-quarter net income for 2011, pushed higher by sales of two and three-wheeled vehicles.
GB Auto controls one third of the Egyptian passenger car market, which has grown quickly in recent years thanks partly to easier access to credit, a wider range of cheaper Asian vehicles and a fast-expanding population.
That growth has boosted its ability to expand in other markets in the region.
“We have established a second company in Iraq and we are currently establishing a company in Libya and a company in Algeria,” Ghabbour said. “Those businesses are dollar-based so you would definitely see much less reliability on the foreign exchange volatility of Egypt.”
Ghabbour said the firm could see an impact on its margins if the Central Bank of Egypt fails to achieve a more gradual currency devaluation of 5 percent per year.
The company agreed in February to assemble and distribute passenger cars provided by Hong Kong-based Geely Automobile Holding Ltd in North Africa.
Ghabbour said the Geely deal would allow GB Auto to fill a gap in the market for cars worth LE 60,000-70,000 ($9,900 to $11,600), generating strong revenue for the company.
GB Auto’s shares are up 18 percent this year, trailing a 47 percent gain by the benchmark Egyptian share index.
