Egypt's Ghabbour could make $180m buy

by Will Rasmussen

Ghabbour Auto, Egypt's largest listed auto maker and assembler, could spend as much as 1 billion Egyptian pounds ($180 million) on acquisitions to take advantage of low prices, its chief executive said on Sunday.

Ghabbour was looking to buy auto distributors or auto parts manufacturers in the Middle East and North Africa region, Raouf Ghabbour told Reuters.

"We are ready and now is the time to make an acquisition," Ghabbour said. "There are many businesses under very high pressure to be acquired."

"We are underleveraged and our balance sheet would allow us to invest 1 billion pounds," he added.

Ghabbour also said the company, which has an exclusive licence from South Korea's Hyundai Motor Company to sell Hyundai cars in Egypt, could also make acquisitions to expand its product line, without giving further details.

He said the company was not currently in talks about any potential purchases.

Ghabbour, who has warned of a "volatile" 2009, said the company would likely sell at least as many vehicles this year as last year, helped by lower inflation and a new Egyptian law requiring aging cars to be replaced.

"This year, despite all the pessimism, Ghabbour Auto should maintain or improve its sales in terms of the number of vehicles," he said.

Ghabbour, which sold about 80,000 vehicles in the first nine months of 2008, has not yet disclosed its earnings or sales for the fourth quarter of 2008.

Ghabbour said the firm was aiming to win 50 percent of replacement sales for approximately 37,400 passenger cars that would likely be forced off the streets this year under a new law forbidding new licences for taxis over 20 years old.

Falling inflation, which hit its lowest in nearly a year in January, would also help vehicle sales, Ghabbour said.

Sales had begun to improve in the first two weeks of February after dropping off sharply in the fourth quarter of 2008, when the global financial crisis hit, Ghabbour said.

"The first half of February has been completely different than November, December, and January, when people were waiting for lower prices," he said.

Sales in the beginning of February were still down about 10 percent from their average level of 2008, he said, declining to give exact figures.

Overall demand for passenger cars in the most populous Arab country would likely fall about 10 percent this year to about 180,000 units as a result of the financial crisis, Ghabbour said.

Ghabbour's market share could climb to above 30 percent in 2009, its highest ever, as a higher yen dampens competition from Japanese cars, Ghabbour said. Ghabbour's market share in 2008 was about 26 percent.

Source :Reuters