GB Auto Plans New Geely Assembly as Second-Quarter Profit Falls
Ghabbour Auto, a Cairo-based car distributor, plans to assemble a second model in the country for China’s Geely Automobile Holdings Ltd. (175), helping to offset the loss this year of a contract with Hyundai Motor Co. (005380)
The Cairo-based company which distributes cars for Hyundai, Volvo AB (VOLVB), Geely and Mitsubishi Motors (7211) and operates in four countries in the Middle East, will start assembling Geely’s four-door hatchback CS5 model next year, Mennatalla Sadek, corporate finance and investment director, said today.
GB Auto posted a 72 percent slump in second-quarter profit today hurt by political and economic turmoil in Egypt and Iraq, its main markets. GB Auto, which has assembled variations of the Hyundai four-door sedan Accent since 1995, has countered the global trend for declining vehicle sales by expanding in the Middle East since the Arab Spring began in 2011.
“People were worried about our ability to keep GB Auto market share without the Verna,” Sadek said. “When we are introducing another model that is Geely, especially if it is priced competitively, then we expect very good feedback.”
The SC5 will accompany Geely’s Emgrand 7 as replacements to Hyundai’s Verna model, Sadek said. There is enough inventory to keep production of the Verna for another year after the supply contract ends this year, he said.
GB Auto’s revenue from passenger cars, which account for 65 percent of its earnings, fell 6.4 percent to 1.6 billion Egyptian pounds ($230 million) in the second quarter.
The shares advanced 1.4 percent to 29 pounds at the close in Cairo. They have risen 4.5 percent this year compared with a 3.4 percent gain in the benchmark EGX 30 Index.
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