September 13, 2012 / 10:47 AM / 5 years ago

Egypt's Ezz Steel swings to Q1 profit

CAIRO, Sept 13 (Reuters) - Egypt’s largest steel producer, Ezz Steel, swung to a profit in the first quarter as prices rose and a buoyant housing construction market absorbed growing volumes of long steel, the company said on Thursday.

The results suggest the company has weathered a chaotic political and economic backdrop since the overthrow of President Hosni Mubarak in February 2011.

Its founder Ahmed Ezz was hit with corruption charges as prosecutors probed the dealings of figures closely associated with the ousted government.

Ezz was a top official in Mubarak’s now disbanded political party. He quit the board of Ezz Steel and its subsidiary Ezz Dekheila last year to fight the charges against him. A court jailed him in September.

Net income was 18 million Egyptian pounds ($2.95 million), compared to a net loss of 10 million pounds in the year-earlier quarter, ezzsteel said in a statement.

Turnover was up 18 percent, it said, reflecting a 20 percent increase in the volume of long steel sold and a 6 percent increase in both long and flat steel prices, it said.

“Long product exports accounted for 2 percent of total long sales, reflecting the continued strong domestic market demand for Ezz Steel’s long products, mainly from private house building activity,” the company said.

Ezz shares were up 4.4 percent at 1000 GMT.

Reduced activity in the global flat steel market meant the company exported 47 percent of its flat steel, the same as a year earlier, Ezz Steel added.

Chairman Paul Chekaiban said he expected the company to maintain a “strong operational performance” in 2012 after achieving record sales volumes in the first quarter.

With a predominantly young population crying out for affordable housing, construction of homes was less affected by the economic turmoil that followed the ousting of Mubarak.

Demand for high-end developments slumped but the building of cheaper homes, much of it in the informal sector, appears to have continued apace. ($1 = 6.0940 Egyptian pounds) (Reporting by Tom Pfeiffer, editing by William Hardy)

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