Against the Odds

By Farah El Akkad

Three mega electricity projects in Beni Suef, the New Capital, Helwan and Gabal El Zeit contributed to a 488% increase in the net profit after tax of transport and logistics company Egyptian Transport and Commercial Services (Egytrans) in 2016.

“Egytrans consolidated results boasted revenues of LE 215.5 million, up [by] 63.6% year on year, net profit after tax rose [by] 488% year on year, closing the year at LE58.7 million, with a net profit margin of 27.2%, an increase of 19.6% over fiscal year 2015,” the company reported in a press conference held at Conrad Hotel.

Chairman Abir Lehata added that these mega electricity projects have had a strongly positive effect on the company’s different lines of business, such as storage and handling services and the land transport segment. The first project is the gas turbine power stations established by Siemens in Beni Suef and the New Capital with a total production capacity of 4.8 gigawatts each, the largest power station in Egypt and the largest ever in the history of Siemens. The second is the South Helwan power station established by Mitsubishi Hitachi with a total production capacity of 1.95 gigawatts. The third project impacting the performance of the company is Gabal El Zeit II wind station, established in collaboration with the Spanish company Gamesa and aiming to install 130 wind towers in its first phase.

Egyptian Transport & Logistics (ETAL), a fully owned subsidiary of Egytrans, posted equally positive results, growing sales overall and increasing net profits after taxes almost fivefold to reach LE 12.3 million in 2016, compared to LE 2.1 million in 2015. The increase is mainly due to Egytrans projects executed in specialized transport services of cargos with exceptional weight and dimensions, among other operations.

Egytrans Depot Solutions (EDS)—another fully owned subsidiary of Egytrans specializing in storing, cleaning and repairing liquid bulk cargo containers (ISO Tanks)—has also shown high performance, achieving net profits after taxes of $0.47 million in 2016 compared to $0.32 million in 2015, with a 47.9% year-on-year increase.

Rising amidst turbulent times

Despite the positive financial outlook the company reported, the market-leading Egytrans struggled last year in a rather tough industry and turbulent economic times.

“The transportation and logistics industry has faced a turbulent year, not only in Egypt but worldwide, as demand for transportation of goods grew below expectations in the first half of the year, leading to a significant downward pressure on freight rates in Egypt and the closing of a major container carrier company,” Lehata said.

Recent government decisions, including currency flotation, the introduction of the Value Added Tax (VAT) and imports limitations as well as currency shortage and several other factors led to an overall trade crunch and have profoundly impacted foreign trade and transport and the logistic industry.

“However, Egytrans continued its leadership strategy and gained significant market share and was able to achieve unprecedented hikes in both financial and operational result for 2016 particularly after the Central Bank’s currency flotation decision which has greatly benefited our company and helped us get over the currency shortage obstacle,” added Sherif Helmy, Egytrans financial manager.

“It is my belief that difficult circumstances are when the best opportunities generally arise and we are fully confident we can face these headwinds and use them to our own benefit,” said Leheta. “It is in times like these that we must begin to invest and work hard to place ourselves in a position that will allow us to capture greater returns and rewards from the inevitable market rebound. I am well aware that we are not out of the woods yet and that the times ahead will come with their own set of challenges […] I remain confident in the underlying fundamentals of the market and in our strategies now that the economy is on the right track.”

On the company’s future outlook, Egytrans General Manager Khaled explained that the company’s plans for 2017 continue with the 2016 strategy. They aim to achieve operational excellence by introducing high quality services and improved customer experience through delivering new solutions in the transport and logistics industry. “We look forward to a more stable operating environment and we believe that challenging operating environments create opportunities for well capitalized and experienced companies like Egytrans with our strong track-record of performing in even the most turbulent of times,” he said. Hussein also announced the launch of a new pilot project expanding the company’s services in container land transport.

A story of success

Lehata explains that the company was officially founded in 1973 but originally dates back to 1939 and started out as a family-owned business. It was nationalized after the 1952 revolt and reopened in 1970s. “My father and his brothers established Egytrans in Sadat’s era, gradually expanding and later joining the Egyptian stock market,” she said. Lehata, who has more than 20 years of experience in different leading positions within the company and had been a member of the board of the Egyptian Transport and Logistics Company (ETAL) and Egytrans Depot Solutions (EDS) since 2009, took over as chairman and CEO of the company’s board of directors in June 2015 after her brother Hussam Lehata passed away.

With 350 employees, Egytrans has been working across eight branches in Egypt “with the mission of making integrated transport easy, safe and cost effective.” The company offers a wide range of services, including sea and air freight, land transport, project logistics, storage, exhibitions and customs clearance.

“All of our operations are extensively studied months before being conducted, studies are based on the expert of our experienced engineers including all safety procedures, our drivers are highly trained on different angle maneuvering, lashing and unexpected road obstacles,” Lehata explains.