Qalaa Holding reported a net loss of EGP 311.7m during the third quarter of 2017 as high interest expenses bite, the company said in a press release on Sunday.
“While our bottom-line continues to witness pullback from high interest expenses mostly related to USD-denominated debt booked at the holding level, the effect is short-term, and we anticipate a return to profitability once Egyptian Refining Company comes online, now 95.7% complete,” said Qalaa Co-Founder and Managing Director Hisham El-Khazindar.
The company reported revenues of EGP 2.47bn, up 38% y-o-y on the backdrop of strong growth from energy subsidiaries TAQA Arabia and Tawazon Chemical Company, as well as solid performances at ASEC Holding and ASCOM.
On a nine-month basis, Qalaa’s top-line recorded EGP 6.87bn in 9M17, up by 28.3% y-o-y.
TAQA Arabia continued to benefit from gradual phase-out of energy subsidies and increase in pricing, while solid waste management company Tawazon’s results were buoyed by higher demand for alternative fuels.
Qalaa’s top-line was also supported by improved performance at ASEC Holding, where a ramp-up in production at Sudan’s Al-Takamol Cement along with higher management fees at ASEC Engineering helped drive the cement sector’s growth in 3Q17.
At the EBITDA level, Qalaa recorded a 182% y-o-y increase to EGP 253.6m in 3Q17, with growth being largely driven by subsidiaries Tawazon and its Omani operation, ASEC Cement and ASCOM.
Qalaa recorded a loss from the sale of a EGP 103.1m investment of in 3Q17, following ASCOM’s divestment of its 64.46% stake in Ethiopian mining arm APM Ethiopia to Allied Gold Corp. in July 2017.
Meanwhile, losses from discontinued operations narrowed significantly to EGP 6.9 in 3Q17, down from EGP 119.0m in the same period last year.
“Qalaa’s push for growth and increased operational efficiency is already bearing fruit and works hand-in-hand with efforts to optimise our portfolio and streamline our investments,” said El-Khazindar.
“Profitability down the income statement is gradually improving, with Qalaa delivering gross margin expansion and a nearly threefold year-on-year improvement at the EBITDA level in the third quarter of 2017. We have also significantly narrowed losses from discontinued operations.”
Bank interest expense climbed 91% y-o-y to EGP 281.6m in 3Q17, with the float of the Egyptian pound in November 2016 affecting USD-denominated debt booked primarily at the Qalaa Holdings level.
