ezzsteel REPORTS CONSOLIDATED FY 2012 RESULTS

ezzsteel REPORTS CONSOLIDATED FY 2012 RESULTS

Cairo, 2 May 2013 - ezzsteel (EGX: ESRS; London Stock Exchange: AEZD), the largest independent producer of steel in the MENA region and market leader in Egypt, today announced its consolidated results for the period ending 31 December 2012. 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

** EPS = Net profit after tax & Minority Interest / No. of shares at the end of the period 

Comment

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

"During 2012, ezzsteel has recorded another year of resilient performance, achieving record volumes both in terms of production and sales. This outstanding operational performance enabled us to remain earnings positive during the year, despite the continued slowdown in the Egyptian economy and the ongoing weakness of global steel markets.

"Our flexible business model which has been patiently built over the past twenty years, is again

proving its worth. We expect it will be further enhanced when the vertical integration project at

Suez will be completed."

For further information:

ezzsteel

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 2012, the Company produced 3.9 million tonnes of long products (typically used in construction) and 893 thousand 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. ezzsteel deploys the latest in modern steel making technology and is committed to further increasing vertical integration across its plants, to boost operational flexibility.

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 2012 were EGP 19.8 billion, which represents an increase of 6 per cent year on year. This increase in sales is due to higher production at EFS following commencement of commercial operation of the long product mill during 2012. Long and flat product prices fell by 3 per cent year on year in the local market. While flat steel export prices fell by 7 per cent, reflecting the broader weakness in international steel markets.

Long steel products accounted for EGP 15.8 billion or 80 per cent of sales in 2012, while flat steel products represented 19 per cent of sales at EGP 3.7billion. The domestic market continued to remain strong, with private house building leading the demand for ezzsteel's long products. Long product exports accounted for 3 per cent of total long sales value. Flat product exports accounted for 44 per cent of total flat sales, lower than the 48 per cent recorded in 2011, due to a contraction of activity in the global steel market. However, the domestic market continued to witness a reasonable level of demand.

Long steel sales volumes reached 3.9 million tonnes during 2012, 8 per cent higher than the 3.6* million tonnes sold during the same period last year, driven by long product production coming on stream at EFS.

Flat steel sales volumes fell by 14 per cent to 893 thousand tonnes in 2012, principally due to the switching of production at EFS to long products, to meet higher local demand and more attractive pricing.

The group's consolidated sales volume reached a total of 4.8 million tonnes in 2012, an increase of 2 per cent from the 4.7* million tonnes sold in 2011, resulting from the increased production of long product at EFS following the commissioning of the long product mill.

The contributions of ESR/ERM, EZDK and EFS to the consolidated net sales for the period ending 31 December 2012 were 28 per cent, 59 per cent, and 13 per cent respectively.

Long steel production volumes reached 3.9 million tonnes during 2012, a 8 per cent increase from the 3.6 million tonnes in 2011, reflecting the increased production from EFS. Flat steel production volumes fell by 11 per cent to 893 thousand tonnes for the period, compared to 1 million tonnes in the previous year. This was due to the suspension of flat production at EFS due to weaker global demand and pricing and the concentration of production at that plant on long products.

* Note: 2011 tonnage includes 339 thousand tonnes of pre-commissioning long products sales

made by EFS's new rolling mills during that period

Cost of Goods Sold

Consolidated Cost of Goods Sold for the year ending 31 December 2012 represented 91 per cent of sales, reflecting higher raw material costs, which increased by 11 per cent, and higher energy costs (gas and electricity), which grew by 58 per cent, although overhead charges were 22 per cent lower when compared with 2011. Electricity and natural gas prices have been rising in Egypt since 2008.

EFS's Cost of Goods Sold, at 110 per cent, reflects higher raw material costs, especially scrap; the impact of the continued suspension of flat production and associated commissioning of the long product mill.

Gross profit

Gross profit of EGP 1.7 billion was recorded for FY 2012, a decrease of 23 per cent from the EGP 2.2 billion recorded in the previous year.

EBITDA

EBITDA for the year ending 31 December 2012 amounted to EGP 1.9 billion, representing a decrease of 24 per cent from EGP 2.4 billion recorded in 2011.

Tax

The company's tax charge fell from EGP 491 million in FY 2011 to EGP 270 million in FY 2012, mainly due to the tax rate that was increased during 2011 which included a one-time adjustment to the deferred tax liability that was fully accounted for during 2011.

Net profit after tax and minority interests

Net profit after tax and minority interests was EGP 8 million for FY 2012, in comparison to a profit of EGP 202 million for FY 2011.

Liquidity and capital resources

At the end of the period, ezzsteel had cash on hand of EGP 1.3 billion and net debt of EGP 8.8 billion. The company has a gearing of Net Debt / Equity of 1.39 times.

Outlook

While international markets have remained weak, particularly for flat steel, private house building still enjoys high single digit growth in Egypt. We continue to focus production at EFS on long products and have successfully maintained our domestic market share in this area. We expect the current market trends of weak global flat product demand, offset by stronger domestic long product demand, to continue.

Divisional Overview

* As the long product sales made by EFS during the full year 2011 were during the Commissioning Period of the plant, they are consequently capitalised within the total project cost in the balance sheet and not in the income statement

- Ends -

Disclaimer:

This press release is issued by ezzsteel (formerly: Al Ezz Steel RebarsS.A.E.)the "Company", in connection with the disclosure of the Company's financial results for the 12month period ending31 December 2012.This press release 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 and flat products in Egypt and in regional and 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 expressed in or implied 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 the 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, 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. Furthermore, none of such parties shall assume, and each of them expressly disclaims, any obligation (except as required by law or the rules of the ESE, the LSE or the FSA) to update any forward-looking statements or to conform these forward-looking statements to ezzsteel's actual results.