FY2009 Consolidated Financial Results

ezzsteel Reports Consolidated Full Year 2009 Results

Cairo, 24th March 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 consolidated full year results for the period ending 31 December 2009. 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:

"The past year has been challenging for the steel industry globally. Conditions were tough in most markets with steel demand remaining depressed during 2009. However, unlike the majority of steelmakers around the globe, ezzsteel was able to operate profitably.

"Despite the global slowdown, demand for steel has remained strong in the Egyptian market, growing by 41 per cent during the year. This has supported demand for our products locally - especially long products - as the local market has been growing steadily. .

"Lower steel prices during the year did impact our profitability. The weakness in flat steel demand has also been instrumental in the decision to suspend production at EFS. However, during the stoppage we have installed additional production flexibility to allow us to direct the production capacity of the plant to produce either flat or long products, or any mix, according to market dynamics and margin generation.

"We have witnessed the value of our vertically integrated strategy during the course of this year. Our operational flexibility and modern technology has enabled us to quickly adapt to changing market conditions. In keeping with this strategy, we will further increase our level of backward integration by adding DRI production capacities.

"After an outstanding 2008 and a challenging 2009, the outlook for 2010 is positive. We expect global steel markets to be balanced and steel prices and margins to continue improving as we go forward. We are confident that ezzsteel is now better positioned to benefit from such improvements as we continue to implement our growth strategy."

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About Al-Ezz Steel Rebars Co. S.A.E.

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 2009 were EGP 12.6 billion compared with EGP 21.8 billion during 2008, representing a decline of 42 per cent. This lower level of sales has been the result of a prolonged period of lower steel prices in 2009 and the accompanying weakness in the flat steel market. Due to the low market prices and reduced international demand, the flat facility at EFS has been shut during the period.

Long steel sales volume reached 3,257 thousand tonnes during 2009, which represents a 3 per cent increase over the 3,157 thousand tonnes sold during 2008. This increase over the previous year was to meet strong domestic demand for long products. Flat steel sales volumes on the other hand witnessed a decline from 1,458 thousand tonnes in 2008 to 1,016 thousand tonnes for 2009, a fall of 30 per cent. This was due to the continued shutdown of the EFS production facility, with any residual demand met by production at EZDK, which commensurately increased its flat production by 41 per cent.

Long steel products accounted for 76 per cent of total sales in 2009, while flat steel products represented 23 per cent of sales. 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 51 per cent of total flat sales as a continued focus for exports.

Long steel production volume reached 3,287 thousand tonnes during 2009 representing a 3 per cent increase over the 3,185 thousand tonnes produced during 2008. Flat steel production volumes on the other hand were 31 per cent lower at 979 thousand tonnes in 2009.

On a plant basis, ESR/ERM long steel production rose by 8 per cent year-on-year in comparison with 2008, while EZDK long production remained constant over the same period. Flat production at EZDK was up 41 per cent year-on-year.

The contributions of ESR/ERM, EZDK and EFS to the consolidated net sales for the period ending 31 December 2009 were 34 per cent, 65 per cent, and 1 per cent respectively.

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

Cost of Goods Sold

Consolidated cost of goods sold for the year ended 31 December 2009 represented 88 per cent of sales, compared to 80 per cent in 2008. This is due to the impact of the shutdown in production at EFS during the period and the proportionally higher costs at EZDK.

Gross profit

Gross profit of EGP 1.6 billion was recorded in 2009, a decline of 65 per cent from the EGP 4.3 billion recorded in the same period in 2008. Lower profits were a result of weakened steel prices and slow demand from the global steel market during the year.

EBITDA

EBITDA for the period reached EGP 1.7 billion, down from EGP 4.5 billion for 2008 representing a decrease of 62 per cent.

Net profit after tax and minority interests

For the year ending 31 December 2009, net profit after tax and minority interests was EGP 88 million, down from EGP 1.2 billion in 2008.

Liquidity and capital resources

At the end of the period, ezzsteel had cash on hand of EGP 1.5 billion and net debt of EGP 6.2 billion. The company has gearing of Net Debt / Equity of 0.99 times.

Outlook

ezzsteel remains confident about the continued strength of the Egyptian market, which has remained largely unaffected by the global economic slowdown. Long product demand is expected to continue to be strong, due to the private housing market and local real-estate activity. While conditions in the global flat steel market have been very weak since the last quarter of 2008, we are now seeing sustained improvement evidenced by the increase in flat steel prices.

We continue to believe that our key competitive advantage lies in our integration, flexibility and our product and market diversification. Our current expansion efforts are focused on vertical integration and flexibility through:

- Increasing our DRI production capacity by 1.8 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 2nd half of 2011.

- Adding long product capacities at our flat steel production facility in Suez (EFS) to enable the site to become flexible in producing either flat steel or long products according to market dynamics. Construction of the long product capacities has already begun and will enter into production gradually - starting April 2010.

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 12 month period ending 31 December 2009. 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.