EL SEWEDY ELECTRIC COMPANY Q2 2022 EARNINGS RELEASE
Cairo | 22 August 2022
ELSEWEDY ELECTRIC Reports Q2 2022 Results; Records Strong Consolidated Top-Line Growth of 48.6% for the Second Quarter and 49.8% for the First Half of the Year
H1 2022 Consolidated Financial Highlights
Revenues | Gross Profit | EBITDA | Net Profit after Minority | |||
EGP 38,964 million | EGP 5,253 million | EGP 3,782 million | EGP 1,887 million | |||
▲ 49.8% y-o-y | ▲ 39.4% y-o-y | ▲ 29.2% y-o-y | ▲ 18.7% y-o-y | |||
Q2 2022 Financial Highlights | ||||||
Revenues | Gross Profit | EBITDA | Net Profit after Minority | |||
EGP 20,391 million | EGP 2,941 million | EGP 2,234 million | EGP 1,126 million | |||
▲ 48.6% y-o-y | ▲ 51.9% y-o-y | ▲ 41.1% y-o-y | ▲ 26.6% y-o-y | |||
ELSEWEDY ELECTRIC (SWDY.CA on the Egyptian stock exchange), the leading Wires & Cables and Integrated Energy Solution Provider in the Middle East and Africa, announces its consolidated financial results for the first half of 2022, reporting revenues of EGP 38,964 million, up by 49.8% year-on-year(y-o-y). The company's net profit after minority interest was recorded at EGP 1,887 million, up by 18.7% y-o-y and representing a net profit margin of 4.8%. From a quarterly standpoint, Elsewedy Electric reported revenues of EGP 20,391 million in Q2 2022, up by 48.6% y-o-y from revenues recorded in Q2 2021. The company's net profit after minority interest was recorded at EGP 1,126 million, up by 26.6% y-o-y and representing a net profit margin of 5.5%.
Note from Our CEO
I am pleased to report a strong set of results closing out the first half of 2022. The Group continues to reap the benefits of its agile and adaptable business model, which has enabled us here at Elsewedy Electric to stand strong in the face of global uncertainty and economic volatility. Thanks to our solid foundation, the Group is able to tackle the ever-changing environment with an expediency and flexibility that supports us in staying the course towards our ambitious targets.
Our Group is proud of its endeavours in leading efforts on sustainable, efficient, and green operations. Part of our success lies in our consistent focus on ramping up Elsewedy Electric's digital capabilities. We have achieved significant milestones in our strategy to digitally transform the Group's conceptual and engineering design into performance optimization. This transformation will not only provide the backbone for maximizing efficiencies, but also the platform for securing future growth and attractive returns to our shareholders.
Further to our goal of becoming a leader in the transition to a low-carbon economy, Elsewedy Electric signed a landmark agreement with the World Bank Group's International Finance Corporation (IFC), to further develop our sustainable manufacturing facilities, as well as increase access to renewable energy in Africa. We are excited to collaborate with the IFC on aligning our robust expansion plans with the United Nation's Sustainable Development Goals, in addition to their own development guidelines and standards. We believe that this partnership will allow us to become the benchmark for integrated energy players across the region and leave an impact on a global scale.
Ahmed El Sewedy
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Q2 2022 EARNINGS RELEASE
Cairo | 22 August 2022
Summary Income Statement
EGP (000)'s | Q2-2022 | Q2-2021 | % Change | H1-2022 | H1-2021 | % Change |
Revenue | 20,391,000 | 13,720,240 | 48.6% | 38,964,314 | 26,012,497 | 49.8% |
Wires & Cables | 9,669,137 | 6,534,719 | 48.0% | 18,947,705 | 12,824,285 | 47.7% |
Turnkey Projects | 8,646,357 | 6,020,602 | 43.6% | 16,200,173 | 10,584,424 | 53.1% |
Meters | 931,215 | 477,722 | 94.9% | 1,731,520 | 1,287,235 | 34.5% |
Transformers | 791,970 | 436,796 | 81.3% | 1,410,909 | 802,644 | 75.8% |
Electrical Products | 255,050 | 172,628 | 47.7% | 474,519 | 332,784 | 42.6% |
Renewables - IPP | 97,271 | 77,772 | 25.1% | 199,488 | 181,125 | 10.1% |
Gross Profit | 2,941,269 | 1,936,108 | 51.9% | 5,252,847 | 3,769,503 | 39.4% |
Wires & Cables | 1,430,975 | 771,677 | 85.4% | 2,481,527 | 1,543,574 | 60.8% |
Turnkey Projects | 1,020,900 | 794,348 | 28.5% | 1,795,062 | 1,372,005 | 30.8% |
Meters | 241,580 | 146,969 | 64.4% | 457,611 | 392,767 | 16.5% |
Transformers | 70,226 | 112,986 | -37.8% | 159,901 | 220,544 | -27.5% |
Electrical Products | 125,760 | 77,342 | 62.6% | 246,185 | 152,319 | 61.6% |
Renewables - IPP | 51,829 | 32,787 | 58.1% | 112,560 | 88,294 | 27.5% |
Gross Profit Margin | 14.4% | 14.1% | 13.5% | 14.5% | ||
EBITDA | 2,234,424 | 1,583,937 | 41.1% | 3,781,716 | 2,927,159 | 29.2% |
EBITDA Margin | 11.0% | 11.5% | 9.7% | 11.3% | ||
Net Income After Minority | 1,126,498 | 889,525 | 26.6% | 1,887,365 | 1,589,594 | 18.7% |
Net Income After Minority Margin | 5.5% | 6.5% | 4.8% | 6.1% | ||
Financial and Operational Highlights
- Revenues increased by 48.6% y-o-y to EGP 20,391 million in Q2 2022 on the back of the strong performance delivered by Elsewedy Electric's cables and turnkey projects segments. All the company's other segments showed promising y-o-y growth for the period.
- Gross Profit increased by 51.9% y-o-y to record EGP 2,941 million in Q2 2022, reflecting the strong increase in the company's top-line from the wires and cables and turnkey projects segments, which offset the impact of increased costs during the period.
- SG&A expenses continue to be impacted by the ongoing global market challenges, coupled with currency depreciations in many regions. Moreover, SG&A partly increased due to the new hires resulting from the company's expansion plans. SG&A increased by 42.0% y-o-y to record EGP 1,112 million at the end of the second quarter of the year. Nonetheless, SG&A improved as percentage of revenues, standing at 5.5% compared to the 5.7% reported in the second quarter of the previous year.
- EBITDA grew by 41.1% y-o-y to EGP 2,234 million in Q2 2022, recording an EBITDA margin of 11.0% compared to 11.5% one year previously. The nominal decline in EBITDA margin came as a result of recent inflationary pressures which resulted in rising costs.
- Net Income after Minority Interest grew 26.6% y-o-y to EGP 1,126 million in Q2 2022, up from the net income of EGP 890 million posted in Q2 2021. Net profit margin for the period came in at 5.5% compared to 6.5% in the second quarter of the previous year.
- Elsewedy reported a net debt position of EGP 13,083 million as at 30 June 2022 compared to a net debt position of EGP 6,116 million booked at year-end 2021. The increase was driven mainly by the contingency planning efforts, deployed in anticipation of delays in commodity deliveries and supply-related shortages that could potentially impact operations. This included raw
ELSEWEDY ELECTRIC | EARNINGS RELEASE | 2 |
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material stocking and coverage of associated freight costs. Net debt was also affected by the acceleration of advance payments to suppliers.
- Inventory came in at EGP 19,497 million as at 30 June 2022, up by 46.4% from the EGP 13,321 million recorded at the end of 2021, as Elsewedy Electric continues to build up higher stock in the midst of global supply-chain disruptions.
- Accounts receivable booked EGP 20,363 million as at 30 June 2022, reflecting an increase of 35.4% compared to EGP 15,043 million at 31 December 2021, while accounts payable grew by 21.2% between December 2021 and June 2022, to reach EGP 10,521 million.
Financial and Operational Review
Revenues grew by 48.6% y-o-y to EGP 20,391 million in Q2 2022 on the back of the solid growth recorded by Elsewedy Electric's turnkey projects and wires and cables segments.
Revenue by Segment | Revenue by Segment |
(Q2 2022) | (Q2 2021) |
1% 0.5% | 1% 1% |
4% | 3% 3% |
5% | |
47% | 48% |
EGP 20.4 bn | EGP 13.7 bn |
42% | 44% |
Wires & Cables | Turnkey | Wires & Cables | Turnkey |
Meters | Transformers | ||
Meters | Transformers | ||
Electrical Products | Renewables - IPP | ||
Electrical Products | Renewables - IPP | ||
- Wires and cables contributed 47% to consolidated revenues, remaining at the forefront of Elsewedy Electric's top-line and growing by 48.0% y-o-y to reach EGP 9,669 million.
- Turnkey projects represented 42% of consolidated revenues, increasing by 43.6% y-o-y to record revenues of EGP 8,646 million and a record backlog of EGP 74.4 billion.
- Meters contributed 5% despite the unfavorable impact of raw material scarcities and supply chain challenges that have lingered from 2021. The segment recorded a remarkable y-o-y increase of 94.9%, with revenues reaching EGP 931.2 million. At present, the pressures imposed by the shortage of ships and other electronic components are being addressed by the company to ensure operations continuity.
- Transformers reported a contribution of 4%, growing by a strong 81.3% y-o-y to reach EGP 792 million. The increase in the segment's revenues was further supported by the gains generated from the strategic acquisitions that were completed in 2021.
- Other electrical products recorded a contribution of 1%, climbing by 47.7% y-o-y to record EGP 255 million.
- Renewables generated 0.5% of consolidated revenues for the second quarter of 2022, growing by 25.1% to reach EGP 97.3 million.
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Cairo | 22 August 2022
Gross Profit increased by 51.9% y-o-y to reach EGP 2,941 million in Q2 2022, backed by the solid growth in the wires and cables segment and turnkey projects. Gross profit margin for the period increased to record 14.4% against the 14.1% recorded in the second quarter of 2021.
Gross Profit by Segment | Gross Profit by Segment | |||
(Q2 2022) | (Q2 2021) | |||
4% 2% | 4%2% | |||
2% | 6% | |||
8% | 8% | |||
40% | ||||
EGP 2.9 bn | 49% | EGP 1.9 bn | ||
35% | ||||
41% | ||||
Wires & Cables | Turnkey | Wires & Cables | Turnkey | |
Meters | Transformers | Meters | Transformers | |
Electrical Products | Renewables - IPP | Electrical Products | Renewables - IPP | |
- The Wires and cables segment was the largest contributor to consolidated gross profit at 49%, with a gross profit of EGP 1,431 million, reflecting a y-o-y increase of 85.4%.
- The Turnkey projects segment was the second main contributor to gross profit at 35%, with gross profit increasing by 28.5% y-o-y to EGP 1,021 million.
- Meters generated a gross profit of EGP 241.6 million, a y-o-y increase of 64.4% from Q2 2021, with a contribution of 8% to gross profit.
- Transformers recorded a gross profit of EGP 70.2 million, reflecting a decrease of 37.8% from the segment's gross profit in Q2 2021, with a contribution of 2%.
- Other electrical products' gross profit grew by 62.6% y-o-y to reach EGP 125.8 million and yielded a contribution to consolidated gross profit of 4%.
- The Renewables segment's gross profit amounted to EGP 51.8 million by the end of Q2 2022, representing a 2% contribution to total gross profit.
Segment Review
Wires and Cables
Q2-2022 | Q2-2021 | % Change | H1-2022 | H1-2021% Change | ||
Revenues Before Intercompany Sales (EGP 000's) | 12,975,046 | 8,356,859 | 55.3% | 24,791,944 | 16,612,350 | 49.2% |
Revenues After Intercompany Sales (EGP 000's) | 9,669,137 | 6,534,719 | 48.0% | 18,947,705 | 12,824,285 | 47.7% |
Gross Profit (EGP 000's) | 1,430,975 | 771,677 | 85.4% | 2,481,527 | 1,543,574 | 60.8% |
GP Margin Before Intercompany Sales | 11.0% | 9.2% | 10.0% | 9.3% | ||
GP Margin After Intercompany Sales | 14.8% | 11.8% | 13.1% | 12.0% | ||
Cables Sales Volumes (Tons) | 33,864 | 32,573 | 4.0% | 69,247 | 67,245 | 3.0% |
Cables Gross profit per ton (EGP) | 29,066 | 15,817 | 83.8% | 23,825 | 15,457 | 54.1% |
ELSEWEDY ELECTRIC | EARNINGS RELEASE | 4 |
Wires & Cables Revenue and Profitability
13.5% | 14.8% | ||||||||||||||
12.7% | |||||||||||||||
11.9% | 10.9% | 11.8% | |||||||||||||
23.6 | 21.7 | 18.5 | 20.3 | 6.5 | 9.7 | ||||
2018 | 2019 | 2020 | 2021 | Q2 2021 | Q2 2022 | ||||
Revenues (bn) | GP Margin | ||||||||
Wires & Cables Backlog
(As of 30 June 2022)
EGP 11.3 bn
Turnkey Projects and Awards
Turnkey Revenue and Profitability
18.0% | 19.8% | |||||||||||||||||||||
13.9% | 14.5% | 13.2% | 11.8% | |||||||||||||||||||
13.2 | 18.9 | 22.7 | 25.4 | 6.0 | 8.6 | |||||||||||||||||
2018 | 2019 | 2020 | 2021 | Q2 2021 | Q2 2022 | |||||||||||||||||
Revenues (bn) | GP Margin | |||||||||||||||||||||
Q2 2022 EARNINGS RELEASE
Cairo | 22 August 2022
- Revenues generated from the Wires and Cables segment amounted to EGP 9.7 billion at the end of Q2 2022, reflecting an increase of 48.0% from the EGP 6.5 billion registered at Q2 2021. The increase in revenues was primarily driven by the significant increase in prices coupled with the currency movement effect, as well as a 4% y-o-y increase in sales volumes, which recorded 33,864 tons in Q2 2022.
- The segment's gross profit increased by 85.4% y-o-y, reaching EGP 1.4 billion at the end of Q2 2022, as a result of highly profitable special cable orders, paired with the increase in sales outside of the Egyptian market backed by the impact of favorable currency movements.
- The segment's gross profit margin increased in the second quarter of the year to record 14.8% compared to 11.8% one year previously.
- At the end of Q2 2022, wires and cables recorded a backlog of EGP 11.3 billion, paving the way for the company to anticipate higher sales from the segment in the future.
- Turnkey projects contributed 42% to total revenues and increased 43.6% y-o-y to reach EGP 8.6 billion in Q2 2022 on the back of higher project executions in Egypt and Tanzania.
- Turnkey projects backlog grew to a record high of EGP 74.4 billion by the end of June 2022, as a result of higher awards.
- Awards for Q2 2022 reached EGP 8.3 billion, driven by an increase in civil and network infrastructure projects in Egypt.
- Turnkey projects recorded a gross profit for the period of EGP 1 billion (+28.5% vs Q2 2021), becoming the second-largest contributing segment at 35%. The segment's gross profit margin stood at 11.8% (-1.4 pp vs Q2 2021).
ELSEWEDY ELECTRIC | EARNINGS RELEASE | 5 |
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El Sewedy Electric Company SAE published this content on 22 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 22 August 2022 13:55:05 UTC.
