1st Quarter 2010 Results

ezzsteel Reports Consolidated First Quarter 2010 Results

Cairo, 02 June 2010 - ezzsteel (formerly: Al Ezz Steel Rebars S.A.E.) (EGX: ESRS; London Stock Exchange: AEZD), the largest independent producer of steel in the MENA region and market leader in Egypt, today announced its first quarter results for the period ending 31 March 2010. The audited results have been prepared in accordance with Egyptian Accounting Standards.

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Key highlights

*EBITDA = sales - cost of goods sold - selling & marketing expense - G&A expense + depreciation and amortisation

Comment

Commenting on the results, Mr Paul Chekaiban, Managing Director of ezzsteel, said:

"Following a difficult 2009, we have witnessed a slight improvement in the levels of demand and steel prices both globally and in the domestic market, during the first quarter of 2010. This has translated into higher margins, thanks to our efficient processes and vertical integration, leading consequently to better profitability.

"Under these circumstances, we took all measures in order to ensure EFS returned to full production as of 1st April 2010. We therefore remain positive about the outlook for the rest of the year."

For further information:

About ezzsteel.

ezzsteel (formerly: Al Ezz Steel Rebars) is the largest independent steel producer in the Middle East and North Africa, and the Egyptian market leader, with a total actual capacity of 5.8 million tonnes of finished steel.

In 2009, the Company produced 3.3 million tonnes of long products (typically used in construction) and 1.0 million tonnes of flat products (typically used in consumer / industrial goods). ezzsteel's customer base is geographically diversified, with flat products mainly directed to export markets, whereas long products are sold in the domestic market. More than 50 per cent of its plants are less than 10 years old, using the latest in modern steel making technology.

Operational Review

All of the below financial breakdowns are based on ezzsteel's consolidated financials which include the financial performance of ESR/ERM, EZDK and EFS.

Sales & Production

Consolidated net sales for the first quarter of 2010 were maintained at EGP 3.4 billion, reflecting the continued stoppage of EFS throughout the period.

ezzsteel's exposure to the global steel market is primarily through its flat steel products, with long steel products primarily directed to serving the buoyant domestic market.

Long steel sales volume reached 853 thousand tonnes during Q1 2010, which represents a 1 per cent increase over the 847 thousand tonnes sold during the same period in 2009, to meet continued strong domestic demand for long products. Flat steel sales volumes also witnessed an increase from 209 thousand tonnes in Q1 2009 to 227 thousand tonnes for Q1 2010; an increase of 9 per cent.

Long steel products accounted for 76 per cent of total sales in Q1 2010 accounting for EGP 2,597 million while flat steel products represented 22 per cent of sales at EGP 763 million. Long product exports accounted for 2 per cent of total long sales due to the continued strength of the domestic market demand for long products. Flat product exports accounted for 43 per cent of total flat sales.

Long steel production volume reached 851 thousand tonnes during Q1 2010 representing a 2 per cent increase over the 835 thousand tonnes produced during the first quarter of 2009. Flat steel production volumes increased by 9 per cent to 226 thousand tons.

On a plant basis, ESR/ERM long steel production rose by 8 per cent year-on-year in comparison with 2009, while EZDK long production was 3 per cent lower at 456 thousand tons due to upgrading of the long products finishing line. Flat production at EZDK maintained near comparable figures to 2009. After a stoppage of 18 months, hot and cold restart tests were performed at our EFS plant which will be in full operation mode as of the first day of the second quarter.

The contributions of ESR/ERM, EZDK and EFS to the consolidated net sales for the period ending 31 March 2010 were 35 per cent, 64 per cent, and 1 per cent respectively.

Cost of Goods Sold

Consolidated cost of goods sold for the period ended 31 March 2010 represented 85 per cent of sales, compared to 90 per cent in Q1 2009. While raw material costs at EZDK were substantially reduced due to its use of iron ore, ESR/ERM saw higher input costs due to their reliance on scrap for feedstock.

Gross profit

Gross profit of EGP 519 million was recorded in Q1 2010, an increase of 58 per cent from the EGP 329 million recorded in the same period in 2009.

EBITDA

EBITDA for the period reached EGP 582 million, up from EGP 382 million for Q1 2009 representing an increase of 52 per cent.

Net profit after tax and minority interests

For the year ending 31 March 2010, net profit after tax and minority interests was EGP 105 million, 78 per cent higher than the EGP 59 million reported for Q1 2009.

Liquidity and capital resources

At the end of the period, ezzsteel had cash on hand of EGP 2 billion and net debt of EGP 6.3 billion. The company has gearing of Net Debt / Equity of 1.0 times.

Outlook

ezzsteel remains positive about the outlook for the rest of 2010. We are confident about the strength of the Egyptian market, with long product demand expected to continue to be strong, due to the private housing market and local real-estate activity. We are now seeing a step up in the demand for flat steel as conditions in the global flat steel market improve, and seeing sustained improvement evidenced by the increase in flat steel prices. After a long period of shutdown, EFS has now begun production.

We are continuing our expansion efforts which are focused on vertical integration and flexibility. This includes:

- Increasing our DRI production capacity by 1.85 million tonnes per year through the construction in Suez of a production facility which will further increase our level of backward integration and decrease our production costs, replicating our EZDK model at our other facilities. Production is expected to start during the second half of 2011.

- Additional melt shop at EFS which will allow increasing the melting capacity at the facility, further enabling flexibility at the site. This will enter into production during the second half of 2012.

Divisional Overview

- Ends -

Disclaimer:

This press release is issued by ezzsteel (formerly: Al Ezz Steel Rebars S.A.E.) or the "Company", in connection with the disclosure of the Company's financial results for the 3 month period ending 31 March 2010. This document includes forward-looking statements. These forward-looking statements include all matters that are not historical facts. In particular, the statements regarding the Company's strategy, the expected strength of demand for long products in Egypt and in regional markets and for flat steel in the international markets, and other future events or prospects are forward-looking statements. Recipients of this document should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors that are in many cases beyond the control of the Company. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance and the Company's actual results of operations, financial condition and liquidity, and the development of the industry in which the Company operates may differ materially from those made in or suggested by the forward-looking statements contained in this document. The cautionary statements set forth above should be considered in connection with any subsequent written or oral forward-looking statements that the Company, or persons acting on its behalf, may issue. Various factors could cause actual results to differ materially from those expressed or implied by the forward-looking statements in this document including worldwide economic trends, global and regional trends in the steel industry, the economic and political climate of Egypt and the Middle East and changes in business strategy of the Company and various other factors. These forward-looking statements reflect the Company's judgment at the date of this document and are not intended to give any assurances as to future results. The Company undertakes no obligation to update these forward-looking statements, and it will not publicly release any revisions it may make to these forward-looking statements that may result from events or circumstances arising after the date of this document. None of ezzsteel, or any of its directors, officers or employees or any other person can give any assurance regarding the future accuracy of the information set forth herein or as to the actual occurrence of any predicted developments nor shall assume, and each of ezzsteel, any of its directors, officers or employees or any other person expressly disclaims, any obligation, except as required by law, the listing rules of the CASE or the LSE or the FSA, to update any forward-looking statements or to conform these forward-looking statements to ezzsteel's actual results.