Yesterday, Qalaa Holdings, a leader in energy and infrastructure (CCAP.CA on the Egyptian Exchange), released its consolidated financial results for the first quarter ending 31 March 2023. The Group recorded a 62% y-o-y increase in revenue to EGP 30.3 billion in 1Q23 and recurring EBITDA of EGP 10.3 billion compared to EGP 3.9 billion in 1Q22. The positive performance reflects solid refining margins at ERC and strong performances across all subsidiaries.
Excluding ERC, Qalaa’s 1Q23 revenue was up 38 % y-o-y, recording EGP 6.9 billion, driven by improved performances across all subsidiaries. TAQA Arabia’s revenue grew 27% y-o-y in 1Q23, reaching EGP 2.9 billion compared to EGP 2.3 billion in 1Q22. The company’s revenue growth was primarily driven by a strong performance at TAQA Gas, including the increase in CNG volumes sold resulting from the expansion in CNG station numbers. Revenues were also supported by the jump in fuel prices at TAQA Petroleum.
ERC’s gross refining margin averaged USD 3.7 million per day in 1Q23, up from USD 2.7 million per day in 1Q22, following higher oil product prices. Refining margins have started to normalize in 2023 after reaching a peak in 2022, declining to an average of USD 3.7 million per day in 1Q23 versus USD 4.9 million per day in 4Q22.
National Printing delivered a 54% y-o-y increase in revenue, reaching EGP 1.4 billion during 1Q23 from EGP 915 million in 1Q22, as it continued reaping the rewards of its new El Baddar state-of-the-art facility. Revenue was up across all three of the segment’s companies owing to a combination of increased volumes and higher prices. Meanwhile, ASCOM delivered a 74% y-o-y increase in top-line to EGP 498.3 million in 1Q23, mostly driven by the impact of the EGP devaluation on the USD-denominated businesses such as ACCM and GlassRock.
Notably, in 1Q23, ASEC Holding’s revenue was EGP 1.3 billion, up 26% y-o-y compared to 1Q22, owing to the depreciation of the EGP against foreign currencies of which the revenues of some of the platform’s subsidiaries are denominated.
Meanwhile, Dina Farms’ revenue reached EGP 409.8 million in 1Q23, up 49% y-o-y. The company’s performance was backed by improved operations and ICDP’s revenue, benefiting from higher selling prices coupled with new product launches. Finally, CCTO delivered a 40% y-o-y revenue increase to EGP 130.7 million in 1Q23, driven by improvements across all revenue streams at its Egypt arm NRPMC.
Qalaa Holdings’ Chairman and Founder Ahmed Heikal stated: The global economic landscape continues to present significant challenges, with the world grappling with one of the most difficult economic periods in recent memory. With debt levels still at historic highs and inflation and interest rates yet to normalize, there are continued expectations of long-term depressed economic growth, higher long-term interest rates, and a heightened focus on reducing debt.
Heikal went on: These challenges are equally daunting on a regional level. On the local front, inflation rates continue their upward trajectory. However, as global inflationary pressures begin to ease, the Central Bank has decided to maintain interest rates for the time being. Despite this difficult environment, we at Qalaa are well-positioned to successfully navigate these challenges.
He continued: With resilience, flexibility, and efficiency ingrained into the core of our DNA, Qalaa continues to be well-positioned to capitalize on this global transition. Egypt’s positioning as an attractive hub for European markets and an entry point to African and Middle Eastern markets pave the way for unique investment opportunities for Qalaa. I am increasingly proud of Qalaa’s continued positive topline performance, driven by the Group’s resilience.
The chairman concluded: Finally, I would like to reiterate that the true value of Qalaa’s performing assets is masked due to the adoption of international accounting standards, which account for assets at their historical cost and adjust for impairments while neglecting any revaluation adjustments.
