Diversified Business Cushions The Blow For GB Auto
Egypt's largest automotive firm, Ghabbour Auto (GB Auto), posted a 72% year-on-year (y-o-y) decline in net profit in Q213, largely as a result of the depreciating Egyptian pound. The company's passenger car sales division has also struggled with the tough operating environment in Egypt, which has seen a number of carmakers temporarily closing their operations. Nevertheless, GB Auto's diversified business means that the company is still profitable and its revenues fell just 0.5% y-o-y , while it is also benefiting from its tie-up with Geely Automobile , in line with BMI 's view that small affordable cars are the most attractive right now (see 'Scope For Budget Brands As Pound Weakens', February 4) .
The Geely brand has captured a market share of 5.5% in Egypt in H113 since first signing a distribution agreement with GB Auto in February 2012. At present, the Egyptian firm only assembles and distributes the Geely Emgrand 7, but this will now be joined by the SC5 as GB Auto looks to replace a contract with Hyundai Motor , which ends in 2013, and build on the momentum achieved with the Chinese brand.
In addition to expanding its partners, GB Auto has also benefitted from its range of other businesses. In Q213, the contribution of total revenue from its financi ng division more than doubled to 5.0%, compared with 2.4% in Q212, while its contribution to gross profit also surged from 5.6% to 9.7%. Tyre distribution has also been a lifeline for GB Auto, increasing its revenue by 66.9% y-o-y in Q213 and its gross profit by 60.2% y-o-y.
|Sharing The Load|
|GB Auto Revenue Contributions By Business Division, Q212 (LHS) And Q213 (RHS)|