São Paulo –Marcopolo, a Brazilian maker of bus bodies, produced 210 units in Egypt in the first quarter of this year. The producer, headquartered in the city of Caxias do Sul, in Rio Grande do Sul, put an assembly line in partnership with Egyptian company GB Auto into operation in August last year, in the city of Suez. In 2009, however, production in Egypt was just experimental, according to information disclosed to ANBA by the Investor Relations director at Marcopolo, Carlos Zignani.
Despite joint venture GB Polo having produced 210 units, only 105 are included in the Marcopolo balance sheet, as the other half of production corresponds to the Egyptian company. For this year, perspectives are for the joint venture to produce 1,200 units in Egypt, 600 for Marcopolo and 600 for GB Auto. In the first quarter, the entire production was turned to the domestic market in Egypt, and that should remain until the end of the year. Starting in 2011, however, Marcopolo plans to export through the joint venture.
"We plan to return to sales in the Middle East from Egypt, and also aim to sell in North Africa, and Europe in future,” said Zignani. In 2009, Marcopolo closed its factory in Portugal, from where it supplied Europe. Marcopolo has already sold to Arab countries, like Saudi Arabia, Oman, Qatar and the United Arab Emirates, but lost market to the Turkish and Egyptian industry between 2004 and 2005, due to the appreciation of the Brazilian real. “We had not managed to break into Egypt due to local producers,” he explained.
That was the reason for Marcopolo to decide to establish the joint venture, also eyeing the nearby markets. With Europe, for example, Egypt has a free trade agreement, which should benefit Brazilian bus exports. The fact that Egypt is a neutral country, and has relations with all countries, including Israel, also weighed heavily in the decision, according to Zignani. The partner of the Brazilian company in Egypt, according to the director, is traded on the New York Stock Exchange and, like Marcopolo, is a transparent and visible company.
Marcopolo production abroad should reach 9,800 units in 2010. The total should represent 40% of all the company is going to produce as a whole, in Brazil and abroad, totalling 24,700 buses. According to figures disclosed by a spokesperson for Marcopolo, operations abroad were left out largely due to the company’s good performance in the first quarter of this year. From January to March, the company produced 2,018 buses abroad, 64.9% more than in 2009.
Export revenues and revenues abroad totalled 233.8 million reals (US$ 131.5 million), 17% more than in the same period in 2009. According to figures disclosed by Marcopolo, highlights were the units in South Africa and India, which more than doubled their production. “The closing of the unit in Portugal and paralysation of the unit in Russia contributed to the lower cost and to the consequent improvement in image,” said the company report. Marcopolo produced with a local partner in Russia, but interrupted activities in late 2008.
Revenues in Brazil, however, were also good, they rose from 264.8 million reals (US$ 148.9 million) in the first three months of 2009 to 445.4 million (US$ 250.5 million) from January to March 2010. In total, net operating revenues of the company from Rio Grande do Sul reached 679.2 million reals (US$ 389.1 million). Gross profit grew 64% to 163.7 million reals (US$ 94.1 million), and net profit rose 221.4% over the same period last year, to 69.1 million reals (US$ 38.9 million). Ebitda rose from 47 million reals (US$ 26.4 million) to 112.6 million reals (US$ 63.3 million), growth of 139.6%. In 2010, Marcopolo plans to invest 60 million reals (US$ 33.7 million) according to the Investment Relations director.
*Translated by Mark Ament
