Elsewedy Electric’s (SWDY) 2019 top line and gross profit were supported by the turnkey segment in addition to the consolidation of revenues form the wind and solar projects. This saved what was a tough year for the wires and cable segment. However, some non-operational items took away from this remarkable improvement in gross profit, lower investment income, and a wider FX loss. SWDY has a backlog of EGP85bn as of 31 December 2019 which should enable the turnkey segment to remain a support. SWDY met our revenue estimate for 2019 (-2% vs. SSEe of EGP47.5bn). However, EBITDA and earnings were below our estimates by a wide margin mainly on the back of (1) reporting lower gross profit net of depreciation as it reported higher depreciation, (2) higher administrative expenses, in addition to (i) booking higher provisions, (ii) lower interest income, and (iii) FX losses.
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