Lots more earnings: Raya Customer Experience and Talaat Moustafa Group Holding are the latest to report strong 1H 2023 results despite wider economic challenges. Meanwhile, GB Corp is continuing to face challenges in the automotive sector while EKH Holding managed to partly mitigate a fall in global fertilizer prices and the EGP deval through its energy business. Expect the earnings to keep on coming as we approach crunch time — today is deadline day for 2Q results.

GB CORP-

The auto sector’s struggles are continuing to weigh on GB Corp: The slowdown in the automotive sector continued to weigh on GB Corp in 2Q 2023, with the company reporting a 23% y-o-y decline in revenues in its earnings release (pdf) yesterday. Promising performance at the company’s non-banking financial services arm helped offset massive supply challenges faced by GB Auto and other auto assemblers and importers amid the FX crisis. The result: GB Auto reported a slight rise in net income, which increased 2% y-o-y to EGP 500.5 mn.

Auto revenues fall: GB Auto saw revenues fall 14% y-o-y to EGP 5 bn in the April-June quarter on the back of inventory shortages caused by the continued “restrictions on imports and a slowdown in opening letters of credit,” the company said. Local vehicle assembly and price hikes helped GB Auto mitigate the impact of the import controls, while a 50% rise in revenues in Iraq offset some of the slowdown in Egypt. Despite this, the group’s car business was able to record a 16% y-o-y rise in net income.

Remember: Sales across the auto sector remained depressed in 2Q 2023 after falling more than a third in 2022. The sector is yet to recover from the impact of capital controls brought in last year that made it almost impossible for distributors to import cars and components, and forced a number of global car manufacturers to suspend sales to Egypt.

GB Capital is on the up: Revenues at the group’s NBFS arm rose 32% y-o-y to EGP 1.2 bn during the quarter on the back of strong performance across all of its subsidiaries. Net income fell 9% to EGP 253 mn due to the impact of non-controlling interest resulting from the company’s sale of its stake in GB Lease.

RAYA CX-

Raya Customer Experience’s (Raya CX) net income increased nearly sixfold t o EGP 81.8 mn in 1H 2023, rising 475% y-o-y, according to its earnings release ( pdf ). The company’s top line climbed 68% y-o-y to EGP 910.7 mn during the same period. The strong results were driven by operational expansion at the company, especially in offshore markets like Saudi Arabia, helping the firm hedge against the devaluation of the EGP.

Outsourcing remained the core revenue driver in 1H: Contact center outsourcing generated EGP 561.4 mn, accounting for 62% of total revenues in 1H 2023. The insourcing (HR outsourcing) business contributed EGP 186.2 mn, making up 20% of the top line. Hosting services generated the remaining EGP 163.1 mn of revenues.

Hard currency revenue streams pay off: Nearly 70% of Raya CX’s overall revenue was generated in USD, providing a buffer against the recent devaluation of the EGP. The company tripled revenue from its Gulf area operations to reach EGP 240.8 mn, accounting for more than a quarter of the overall top line. The core business remains in Egypt, where revenues rose 43% y-o-y to hit EGP 646 mn.

EKH-

EKH income falls on lower fertilizer prices, EGP deval: Egypt Kuwait Holding’s (EKH) net income attributable to shareholders fell 30% y-o-y to USD 100.5 mn in 1H 2023, according to its earnings release (pdf). The decline came on the back of a drop in urea prices from historic highs a year before as well as a weaker EGP, which drove down the company’s revenues 33% y-o-y to USD 387 mn during the period.

On a 2Q basis: Net attributable income fell 44% to EGP 40.4 mn in 2Q 2023, while revenues declined 43% to EGP 162.2 mn.

Fertilizer prices came back down to earth: Revenues from the company’s fertilizer and petrochemical segment fell 38% y-o-y to USD 226 mn in 1H as urea prices fell from an all-time high of over USD 1k per ton in 2Q 2022 to a low of USD 287 per ton during 2Q 2023. As a result, EKH fertilizer subsidiary AlexFert saw revenues fall 48% y-o-y to USD 132.3 mn during the period.

The company’s energy subsidiaries cushioned the fall: Although Sprea Misr’s revenues declined 15% y-o-y in USD terms due to the EGP deval, they rose 50% in EGP terms on the back of output from new production lines, outperforming expectations. Similarly, NatEnergy saw a 39% y-o-y rise in revenues in EGP terms, driven by an 18% rise in energy generation and a 9% increase in distribution volumes.

What they said: “Looking ahead, I remain optimistic about our ability to navigate the current uncertain operating environment,” said CEO Sherif El Zayat. “At the beginning of 2023, we announced that we would be investing USD 170 mn over the course of the year . . . During the first six months of 2023, we have successfully invested USD 100 mn, and we plan to deploy the remaining USD 70 mn throughout the second half of the year.”

TMG HOLDING-

TMG Holding reports higher top line, bottomline in 1H 2023: Talaat Moustafa Group Holding’s consolidated net income rose 40% y-o-y to EGP 1.6 bn in 1H 2023, according to its earnings release (pdf). Revenues, meanwhile, climbed 51% y-o-y to EGP 10.7 bn during the period.

Contracted sales grew: TMG Holding registered contractual real estate sales of EGP 51.4 bnin 1H 2023, which it described as a “historic and unprecedented” sales figure. The company’s backlog of sold units scheduled for delivery over the next five years grew to EGP 102 bn by the end of 1H 2023, up 52% y-o-y.

Development revenues rose 46% y-o-y to EGP 7.4 bn. Revenues brought in by the group’s hotels — the Nile Kempinski as well as the Four Seasons Nile Plaza, Sharm El Sheikh, and San Stefano — nearly doubled to EGP 1.8 bn. Other recurring and service revenues stood at EGP 1.5 bn, up 37% y-o-y.

REMEMBER- For real estate companies, sales ≠ revenues. Most book a sale when you sign a contract to buy a home, but only record (some or all of) the value of the unit they sold you when they (a) deliver the unit to you or (b) hit a percentage of completion on a project.

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