INTERVIEW-Egypt's GB Auto moves to fast lane, boosts output


* Boosts production capacity to 90,000 cars by mid-2010

* Sees Egypt's car sales rising to 200,000 units in 2010

* Shares up 50 pct in 2010, company to pay 1 EG pound div

By Sherine El Madany

CAIRO, March 31 (Reuters) - Egyptian vehicle maker GB Auto , hammered by the global financial crisis last year, will ramp up production as the market steers toward a recovery in 2010, with car sales set to hit a record this year.

The company, Egypt's biggest listed automobile assembler, will boost car production capacity to 90,000 vehicles by mid-2010, up from 30,000 last year to meet growing domestic demand, its investor relations director told Reuters in an interview on Wednesday.

"Demand has begun a V-shape recovery very quickly," said Bassem El-Shawy, GB Auto's investor relations director. "Fourth quarter figures showed a very strong recovery, and we are seeing confirmation of this in the first quarter of this year."

A recovery in Egypt's vehicle market helped boost GB Auto's revenue in the fourth quarter by 48 percent to 1.32 billion Egyptian pounds ($239.9 million), beating forecasts, with net income in the quarter amounting to 89.9 million pounds.

Car sales in the Arab world's most populous country, are seen rising 25 percent year-on-year to 200,000 in 2010, Shawy said, adding GB Auto's share of Egypt's passenger car market will be around 27 percent to 30 percent.

The automotive sector in Egypt was hit in 2009 by the downturn, but demand has started to pick up, helped in part by a government plan to offer affordable taxis to drivers.

"Our share of sales under the modern taxi plan is 10 percent," Shawy said. "This plan is not limited to Cairo and should be expanded to other cities later on."


GB Auto manufactures, assembles, imports and distributes vehicles for Hyundai Motor Co , Bajaj Auto Ltd , Mitsubishi Motors Corp , Volvo AB and Mazda Motor Corp .

Its shareholders approved on Wednesday a 1 pound per share cash dividend, the company's first in a move analysts say is a sign of stability in earnings.

The stock has rallied 50 percent so far this year to close at 36 pounds on Wednesday, riding a pick-up in sales as the company appears to be past the worst of the global financial turmoil that hit sales during most of 2009.

GB Auto began selling vehicles in Iraq in mid-February, opening a new market and said total sales would reach about 36,000 vehicles within a year.

The company said earlier this month it expected to double profits in 2010 and would start exporting buses and trailers to some Middle Eastern and East European markets. [ID:nLDE6271RY].

"We plan to export buses in 2010 after we ramp up our bus plant in Suez, which will serve the domestic market, as well as some markets in the Gulf and East Europe," Shawy said.

The plant is expected to produce 9,000 buses by the end of the year, he added.

GB Auto approved in January the issue of five-year bonds worth 1 billion pounds to fund new service centres in Egypt and its regional expansion. [ID:nLDE60R28W]

It also said in January it had an exclusive agreement to import and sell Mazda-branded vehicles in Egypt. ($1=5.503 Egyptian Pound) (Reporting by Sherine El Madany; editing by Andre Grenon)



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