Egypt's GB Auto freezes CAPEX plans on COVID-19

Cairo –  Ghabbour Auto (GB Auto) has taken additional measures to shield its customers and employees against the implications of the novel coronavirus (COVID-19) outbreak.

The company decided to freeze all auto and auto related capital expenditure (CAPEX) plans for the rest of 2020, except for the minimum required maintenance CAPEX, according to a bourse disclosure on Thursday.

GB Auto also adopted a cost reduction programme starting from April, together with keeping an an appropriate inventory volume.

During the last week of March, local and regional auto sales were hardly hit by the economic slowdown caused by the coronavirus pandemic. Sales in Egypt declined due to the temporary halt of licencing and registration procedures and a retreat in consumer spending on non-essential goods.

Meanwhile, Iraqi operations were affected by the current nationwide lockdown and curfew.

GB Auto also revealed that 31% of GB Lease's customers and 25% of Drive's customers requested extensions on their dues after the Financial Regulatory Authority (FRA) and the Central Bank of Egypt (CBE) announced that loan payments will be deferred for six months.

"The company will be managing its repayments to the banks through extension of dues without any additional costs. This is expected to reflect positively on the cash flow statement and have no impact on the income statement."

It is noteworthy that during 2019, GB Auto’s net profits stood at EGP 223.55 million, down from EGP 672.3 million in 2018, including minority shareholders’ rights.