Top-line growth reflects Qalaa’s robust operational and growth strategies driving strong performances across all subsidiaries as well as improved refined product prices and refining margins at ERC; excluding ERC the Group delivered a strong 25% y-o-y growth in consolidated revenue to EGP 5.9 billion and a 103% y-o-y increase in recurring EBITDA to EGP 1.1 billion in 3Q22.

Key Operational Highlights

  • ERC was the primary driver behind consolidated revenue growth, contributing c.75% to Qalaa’s total revenue in 3Q22;
  • TAQA Arabia’s solid top line results reflect strong performance at TAQA Petroleum and were further supported by higher power generation and distribution volumes at TAQA Power and CNG volume growth at TAQA Gas;
  • ASEC Holdings delivers stable year-on-year revenue despite Al-Takamol Cement performance being impacted by political turmoil in Sudan and a difficult rainy season, which affected sales volume;
  • National Printing saw improved volumes and benefitted from higher prices at all its companies. El Baddar continued capitalizing on its new cutting-edge facility, while growth in domestic sales outweighed a decline in export sales at Shorouk for Modern Printing and Packaging and Uniboard;
  • ASCOM’s topline growth was driven by improved performance at ACCM and volume expansion at GlassRock;
  • Dina Farms Holding’s revenue grew year-on-year as ongoing facility enhancement projects enhance operations at Dina Farms and ICDP benefits from its direct distribution strategy as well as improved pricing;
  • The Group’s export proceeds recorded c. USD 27.1 million in 3Q22, while local foreign currency revenue recorded c. USD 987.2 million. Moving forward, the Group will continue focusing on exports and leverage the cost advantage available to local manufacturers;
  • ERC’s receivables from EGPC continue to accumulate and have reached EGP 10.2 billion as of 30 September 2022;
  • Finalizing debt restructuring at Qalaa Holdings remains a priority, yet the process is slowed by the ongoing FX turbulence;
  • Qalaa ideally positioned to benefit from macroeconomic dynamics and management is confident that the strategy of incremental investments and gradual deleveraging will continue to pay dividends in the future;
  • Qalaa’s bottom-line profitability will be affected in the coming period owing to the depreciation of the Egyptian pound, with an anticipated FX based loss in the fourth quarter.

 Qalaa Holdings, a leader in energy and infrastructure (CCAP.CA on the Egyptian Exchange), released today its consolidated financial results for the third quarter ending 30 September 2022. The Group recorded an 86% y-o-y increase in revenue to EGP 23.7 billion in 3Q22, and recurring EBITDA of EGP 8.8 billion compared to EGP 1.2 billion in 3Q21. The solid performance reflects the success of Qalaa’s robust operational and growth strategies across its subsidiaries. Furthermore, improved refining margins at ERC along with higher global commodity prices benefitted the Group’s consolidated performance during the quarter. At Qalaa’s bottom-line, the Group remained profitable for the second consecutive quarter, booking a net income after minority of EGP 16.7 million in 3Q22 compared to a net loss of EGP 440.7 million in the same quarter last year. The net profit figure was realized despite an FX loss of EGP 236.2 million booked in 3Q22 on the back of the depreciation of the Egyptian pound.

Excluding ERC, Qalaa’s revenue grew by 25% y-o-y to EGP 5.9 billion in 3Q22, driven by improved performances across all its subsidiaries. TAQA Arabia’s revenue grew 19% y-o-y during the quarter to EGP 2.9 billion. Revenue growth was primarily driven by a strong performance at TAQA Petroleum and was further supported by higher power generation and distribution volumes at TAQA Power and CNG volume growth at TAQA Gas.

National Printing delivered a 67% y-o-y top line increase in 3Q22 as it continued reaping the rewards of its new El Baddar state-of-the-art facility. Additionally, higher volume and an optimized pricing strategy at both Shorouk and Uniboard reflected positively on National Printing’s results during the quarter. Meanwhile, ASCOM delivered a 55% y-o-y increase in top-line to EGP 357.3 million in 3Q22 supported by higher export proceeds at ACCM as well as increased volume and higher prices at GlassRock.

At ASEC Holding revenue was stable year-on-year, standing at EGP 977.9 million in 3Q22, as Al-Takamol Cement faced a difficult rainy season, which affected sales volume. Meanwhile, Dina Farms Holding’s revenue reached EGP 327.0 million in 3Q22, up 42% y-o-y backed by improved operations at Dina Farms and ICDP’s revenue benefiting from higher prices and direct distribution strategy. Finally, Nile Logistics delivered a 14% y-o-y increase in revenue to EGP 89.9 million in 3Q22.

“I am extremely pleased with Qalaa’s continued strong top-line growth and solid performance across the Group during the third quarter of the year. Qalaa continued demonstrating its resiliency and agility during tough and uncertain times,” said Qalaa Holdings’ Chairman and Founder Ahmed Heikal. “The Group delivered impressive year-on-year topline growth of 86%, a seven-fold growth in EBITDA, and despite a sizable FX loss resulting mainly from currency depreciation, it remained profitable for the second consecutive quarter this year.”

“Qalaa’s resilience and strengthening foundations position it well to navigate an everchanging global economic and political landscape. The world today is entering a period of long-term adjustment with the era of low inflation and cheap money ending. Today, high interest rates and elevated debt-to-GDP ratios will present a chokehold on global growth rates that will weigh heavily on emerging markets and the flow of funds over the coming decade. Yet with every challenge comes opportunity. With the rise of deglobalization and the decoupling of Western economies from their manufacturing hubs in China, countries like Egypt stand to benefit if they adopt the right policies. Despite the macroeconomic challenges Egypt is facing, we are ideally positioned to capitalize on this global re-engineering, serving as a viable manufacturing hub for European economies, an entry point to African markets, and a non-aligned economic bridge between east and west. These dynamics present significant investment opportunities for local infrastructure and manufacturing powerhouses like Qalaa,” said Heikal.

“Across the board, our subsidiaries are already demonstrating their competitive advantage in this new dynamic and are reaping the rewards of Qalaa’s carefully executed growth and investment strategies, with solid performances in our energy, cement, printing, mining, agriculture, and logistic businesses. A key theme has been the continued capitalization on high oil prices, local manufacturing, and import-substitute plays, with our portfolio structure providing a strong shield against devaluation pressures. Overall, Qalaa is on the right side of the macroeconomic equation and our outlook remains positive. We have already earmarked several small and medium-sized investments on the horizon, as well as more strategic ones to be executed within the next two-to-three years, that will continue driving our momentum forward,” concluded Heikal.

Qalaa’s recurring EBTIDA increased substantially to EGP 8.8 billion in 3Q22 compared to EGP 1.2 billion in 3Q21. Profitability was primarily supported by ERC’s positive performance during the quarter. Excluding ERC, Qalaa’s recurring EBITDA growth was driven by improved profitability across most of the Group’s subsidiaries.

“I am very pleased with Qalaa’s ability to sustain its performance and deliver a positive net income for the second consecutive quarter during these challenging times, thanks to broad-based growth across our portfolio,” said Hisham El-Khazindar, Qalaa Holdings’ Co-Founder and Managing Director. “At TAQA Arabia, we continued to capture growing energy demand for our downstream operations, from natural gas distribution to power generation, CNG and fueling stations. Similarly, rising oil prices have been a boon for our oil refining business, with a solid recovery in refining margins as reflected on ERC’s profitability. Meanwhile, at our mining and printing businesses, Qalaa position as an import-substitute and export play is driving sustainable consolidated growth and USD proceeds for the Group. Finally, our agriculture and logistics businesses continue to demonstrate their solid investment fundamentals and hold significant promise for the Group going forward.”

“Our key focus heading in 2023 will be to continue driving EBITDA growth and build on the significant progress we have achieved when it comes to business development, cost cutting, and operational efficiencies, all of which are here to stay. These efforts have seen our recurring EBITDA excluding ERC record a significant 103% y-o-y increase to EGP 1.1 billion on the back of broad-based growth, with the largest contributors being TAQA, National Printing and Cement,” El-Khazidar added.

“Equally important in the coming period is reducing our risk levels with a specific focus on deleveraging and growing the Group’s cash flows. On the former, we are at the tail-end of our restructuring and deleveraging journey, with ERC on track to become current on all due principal payments by 1Q2023, while progress continues to be made on restructuring Qalaa’s holding level debt. The progress, however, is being slowed by the current currency volatility. Meanwhile, our cash generation ability will continue to improve with growing EBITDA, and as inventory levels normalize following a period of prudent build up to hedge against global supply chain disruptions and spiraling inflation.”

“Overall, our performance during the third quarter of 2022 is a testament to our strength, resiliency, and flexibility when coming up against unprecedented challenges and uncertainties, and we look forward to continue delivering exceptional results for many quarters to come," concluded El-Khazindar.

Qalaa Holdings’ full business review for 3Q 2022 and the financial statements on which it is based are now available for download on ir.qalaaholdings.com.

-Ends-

Qalaa Holdings (CCAP.CA on the Egyptian Stock Exchange) is an African leader in energy and infrastructure. Qalaa Holdings builds responsible and sustainable businesses that add value to the economies and societies in which it does business. Formerly known as Citadel Capital, Qalaa Holdings controls subsidiaries in industries including Energy, Cement, Agrifoods, Transportation & Logistics, Mining and Printing & Packaging. To learn more, please visit qalaaholdings.com.

Forward-Looking Statements

Statements contained in this News Release that are not historical facts are based on current expectations, estimates, projections, opinions and beliefs of Qalaa Holdings. Such statements involve known and unknown risks, uncertainties and other factors, and undue reliance should not be placed thereon. Certain information contained herein constitutes “targets” or “forward-looking statements,” which can be identified by the use of forward-looking terminology such as “may,” “will,” “seek,” “should,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue” or “believe” or the negatives thereof or other variations thereon or comparable terminology. Actual events or results or the actual performance of Qalaa Holdings may differ materially from those reflected or contemplated in such targets or forward-looking statements. The performance of Qalaa Holdings is subject to risks and uncertainties.

For more information, please contact

Ms. Ghada Hammouda
Chief Sustainability and Marketing Officer
Qalaa Holdings
ghammouda@qalaaholdings.com