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Management’s plans include the explo-
ration of new export vistas in East Africa,
North Africa and the Gulf Cooperation
Council, marking a significant new de-
velopment in the company’s drive to
diversify both revenues and earnings by
product line and geography.
Moreover, serving clear demand in
export markets from Egypt — a fully
known market to management which
now enjoys political stability and which
is becoming a cost-competitive export
base as a result of devaluation of the
Egyptian pound — will allow the com-
pany to mitigate new foreign territory
risk while working simultaneously to
address risk in Iraq and Algeria, the two
most promising of the company’s pres-
ent expansion markets.
In addition to a continual focus on
growth and investment in long-term
opportunities, management has also
stressed efficiency. The company is ac-
customed to operating in a lean, efficient
manner in all aspects of the business — a
trait that will serve us well as the coun-
try’s free trade agreements with the EU
and Turkey on imports duties are fully
implemented. These agreements have
already placed Chinese and Korean vehi-
cles at a disadvantage, and management
believes the full implementation of the
two partnership agreements could have
a substantial negative impact on the
market. The Government of Egypt ap-
pears to recognize the difficult position
in which automotive manufacturers
and assemblers find themselves, and
management is cautiously hopeful that
it will take action. That said, GB Auto is
looking forward to fairly strong growth
of the passenger car market in the com-
ing year.
On the Commercial Vehicles & Con-
struction Equipment line of business,
management does not expect significant
growthof the tourismmarket—and there-
fore the bus segment—until the latter half
of the year. However, given the ongoing in-
vestment in infrastructure and renewed
economic activity, the other divisions in
this key line of business are expected to
continue their current growth trends.
The other line that management ex-
pects notable changes from in 2015 is
the After-Sales division. With new out-
lets opening and the recent uptick in
sales of new vehicles, it is considered
likely that After-Sales will turn in a
particularly strong performance in the
coming period, boosting the contribu-
tion of the Passenger Cars, Motorcycles
& Three-Wheelers and Commercial
Vehicles & Construction Equipment.
Tires and Financing Businesses both
reported solid performances in 2014, a
trend that management anticipates con-
tinuing in 2015.
Turning our attention to the region,
GB Auto continues to view measured
risk as worthwhile and remains an in-
vestor in long-term growth, not imme-
diate payoffs. Our operations in Algeria,
Iraq and Libya should be viewed through
that lens.
In Algeria, GB Auto is set for a good
year. Management is convinced of the
long-term potential of this market and
has worked to align with Geely Em-
grand to get the right models at the right
prices, set up an excellent management
team, and establish an effective dealer
network. Furthermore, our representa-
tions in tires are very warmly received in
Algeria.
The Iraqi market, as expected and dis-
cussed in detail in our 2014 Earnings
Releases, closed 2014 on a challenging
note as a result of Iraqi political and se-
curity developments. That said, manage-
ment remains optimistic that Iraq will
not be left to fail, and that private-sector
actors who stay the course through-
out the present period of turmoil will
be those ideally placed to capture the
upswing when the market begins to
improve. Furthermore, as we weather
this period, management is exploring
all options to improve run-rates and
profitability for our operations there in
the long term, with a present focus on
central and southern Iraq, where opera-
tions have been less impacted than in
the north.
In Libya, the security situation remains
very challenging and management is
maintaining the company’s position
there in a very cautious manner while
still positioning GB Auto to capitalize
on a recovery to that market when and if
that should come to pass. In the interim,
all inventory in the country is insured
and no personnel are present on the
ground in Libya.
Finally, we note that our forecasts for
the year do not include allowances for ex-
ogenous shocks that may have an impact
on market sentiment. At present, these
shocks are largely of a political nature,
but extend to the potential for shocks re-
lated to economic policy swings.
“GB Auto sees real growth potential in the Egyptian
market and is continuing to invest accordingly.”
Ghabbour Auto | 2014 ANNUAL REPORT
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