4 / 88
On the face of it, the year just ended was
outstanding: Our home market of Egypt
broke 2008 levels of performance in pas-
senger car sales, suggesting we have at
last recovered from the spillover of the
global financial crisis and, more critically,
the 2011 revolution and its complex after-
math. Heavy spending on infrastructure
and renewed corporate appetite saw the
return to life of our Commercial Vehicles
& Construction Equipment, validating
our steadfast belief in this critical busi-
ness. The market for our Motorcycles &
Three-Wheelers division is nothing short
of brilliant — an adjective that could
equally apply to the performance of our
Financing Businesses. Meanwhile, our
Tires, New Businesses and After-Sales ac-
tivities all took important strides forward.
And yet it is hard not to wonder what
might have been. Our bottom line was
eroded by foreign exchange losses, due
entirely to challenges created by Egypt’s
foreign currency regime. We lost more
than a full quarter of three-wheeler sales
after a since-aborted import ban. Libya
and Iraq, our most promising expansion
markets, ran headlong into political and
security challenges beyond the control of
any market player.
The need to navigate opportunities and
challenges is, fundamentally, the great-
est balancing act in any business. Happy,
then, is the day when you can address ex-
isting challenges by seizing opportunities.
On the challenges side of the ledger, we
have internal and external issues to ad-
dress. The external headwinds are simple:
No business owner today can claim to
have clarity on where Iraq is heading, and
the security challenges in Libya are clear.
Equally clear is our response: With our in-
ventory in Libya fully insured, we remain
careful observers of the situation, but will
not re-enter the market until our staff can
be safely deployed. In Iraq, we continue
to plan for the future while maintaining
relatively normal operations in both the
nation’s southern and central provinces.
Equally clear is the domestic challenge,
where we are calling on the government
of Egypt to take steps that will ensure the
continued viability of the local automo-
tive assembly industry and the hundreds
of thousands of direct and indirect jobs
it supports. As matters stand, trade lib-
eralization under the European Union,
Moroccan and Turkish partnership agree-
ments gives imports from those areas
an exceptionally unfair advantage over
products assembled in Egypt. Indeed, the
advantage is sufficiently unfair that it is
difficult to envision how a single car will
be assembled and sold in Egypt by 2019.
Alongside careful planning and execu-
tion, we will handle these challenges in
the same manner as we have since 2011:
By pursuing geographic and product line
diversification, now with a twist.
We continue to see outstanding ave-
nues to create shareholder value by deriv-
ing a larger part of our revenues outside of
Egypt (our core geography) and passenger
cars (our core product line). In light of the
era of stability into which Egypt is now
passing, we are aiming to capture more of
the opportunities presented by this diver-
sification drive without leaving home. In
short: We will export, export and export
still more — even as we pursue growth in
our current markets and product lines.
This export drive takes a number of
forms. First, we have established a reputa-
tion for quality and value-for-money with
the products of GB Polo, our bus manu-
facturing operation in Suez, which has
successfully penetrated the GCC and East
African markets even as it wins new or-
ders on the back of rising mass-transport
spending here at home.
Also, we are returning to my roots in
this industry with our plan to build a tire
plant that will allow us to start locking in
supplies of high-quality tires across a wide
spectrum of sizes and uses. By doing so,
we will add another strong brand to our
portfolio, giving us more control over
pricing and margins.
Fellow shareholders, Egypt is a nation
endowed not just with the Suez Canal,
Mediterranean and Red Sea coast lines,
a growing 90-million person consumer
market, cultural leadership of 300+
million Arabic speakers and a diverse
economy. Ours is also a nationmarked by
an entrepreneurial spirit and an innate
ability to take and mitigate risks. I see
vast opportunities in this nation.
I thank you all once more for your trust,
and look forward to reporting on the lat-
est chapters we’ve written in our drive to
grow an exceptionally exciting business.
Dr. Raouf Ghabbour, CEO
Message
from
the CEO
Ghabbour Auto | 2014 ANNUAL REPORT
2