Egytrans Investors Presentation 2016 Annual Results Disclaimer Click - - PowerPoint PPT Presentation
Egytrans Investors Presentation 2016 Annual Results Disclaimer Click - - PowerPoint PPT Presentation
Egytrans Investors Presentation 2016 Annual Results Disclaimer Click to edit Master title style Statements contained in this document that are not historical facts are based on current expectations, estimates, projections, opinions and beliefs
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Statements contained in this document that are not historical facts are based on current expectations, estimates, projections, opinions and beliefs of Egytrans. Such statements involve known and unknown risks, uncertainties and other factors; undue reliance should not be placed
- thereon. Certain information contained herein constitutes “targets” or “forward‐looking
statements,” which can be identified by the use of forward‐looking terminology such as “may,” “will,” “seek,” “should,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue” or “believe” or the negatives thereof or other variations thereon or comparable terminology. Actual events or results or the actual performance of Egytrans may differ materially from those reflected
- r contemplated in such targets or forward‐looking statements. The performance of Egytrans is
subject to risks and uncertainties. Various factors could cause actual results to differ materially from those expressed or implied by the forward‐looking statements in this document including worldwide economic trends, the economic and political climate of Egypt, the Middle East and changes in business strategy and various other factors.
Disclaimer
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Agenda
1. Company Overview 2. Why Egytrans? 3. Global Transport & Logistics Industry 4. Transport & Logistics Overview Egypt 5. Financial Statements 6. Strategic Direction 7. Industry Outlook 8. Egytrans Outlook
Outline
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COMPANY OVERVIEW
We make integrated transport easy, safe & cost-effective
Click to edit Master title style History and Milestones
Click to edit Master title style Subsidiaries and Affiliates
Click to edit Master title style Key Services
Click to edit Master title style Our Blue Chip Customers
Click to edit Master title style Shareholder’s Structure
Source: Egytrans Shareholders’ Structure as of 31‐Dec‐2017
Leheta Family, 11.67% National Investment Bank, 25.25% Free Float, 30.42% Financial Institutions, 8.81% Mohamed Ashraf Omar Group, 18.00% Mostafa Eissa, 5.85% Other, 32.66%
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- Egytrans has committed itself to a code of corporate governance that ensures responsible,
value‐based, transparent management of the company, reinforcing the long‐term confidence
- f shareholders, customers, employees and other stakeholders in the leadership of the
company.
- Egytrans has received a number of awards in Corporate Governance in recognition of our
efforts in this area.
- Reviews of the company’s corporate governance practices were conducted by IFC more than
- nce, most recently in 2016, to ensure continued application of best practices
Corporate Governance
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- Incident Free ‐ We are committed to fulfil our Incident‐Free ambition to protect people, the
environment, our assets and reputation.
- Environmental Stewardship ‐ We are committed to preventing and minimizing environmental
impacts, maintaining a robust environmental management system and effective emergency management plans in compliance with laws, regulations, and good industry practice.
- Business Conduct ‐ We work against all forms of corrupt practices including bribery and facilitation
- payments. We focus our efforts on implementing a robust compliance program which includes
amongst other measures mandatory procedures, employee training, due diligence of third parties, and recording of gifts and hospitality.
- Employees –We are committed to providing positive, productive and supportive working
environments for all employees. We treat all employees with respect and dignity and we will not tolerate discrimination or harassment of any kind.
- Human Rights ‐ We respect human rights and are committed to integrating human rights into our
business processes in accordance with the United Nations Guiding Principles on Business and Human Rights, with a focus on human rights due diligence and establishing operational grievance mechanisms.
- Stakeholder engagement – We proactively engage with stakeholders to understand their interests.
- Communities – We commit to making a positive contribution to local communities’ social and
economic development through our core business activities, by seeking out opportunities to leverage our capabilities and working in partnership with reputable business partners, charities and
- rganizations.
Corporate Sustainability & Social Responsibility
Egytrans is committed to conducting business in a responsible, ethical and sustainable manner. Our business is underpinned by our Core Values and Policies, our commitment to the United Nations Global Compact and seven core principles we integrate into our business:
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Why Egytrans?
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Egytrans has the right leadership, the right strategy and the financial strength to drive superior shareholder returns Market Strength
- Established
Brand with diverse long term customers
- Strong market
position
Strategy and Resources
- Solid Strategy
- Strong Balance
Sheet
People
- Strong
leadership with proven track record
- Customer
driven employees
- Continuous
improvement culture
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- A growing market opportunity
- Accelerating EBITDA and cash generation, while investing in growth
- Numerous company‐specific margin improvement opportunities
- Well‐diversified by service offerings and customer base
- Leader in high growth project logistics sector
- World class team who are focused on driving results
Egytrans: High Growth and High Returns
We are on track in our strategic direction and in a good position to achieve 2017 targets
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We use our highly integrated network of people, technology and physical assets to help customers manage their goods more efficiently throughout their supply chains
2016 Revenue
- f 173.1
mn
Freight Forwarding 47.4% of Revenue
Transport 42.6% of Revenue
Storage 10% of Revenue
We are a leading Transport & Logistics Company
Source: Egytrans Separate financials
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Key Metrics:
- # of Customers: 500
- # of Employees: 325
- Locations: 8 branches
- Warehouses: 28,000 m2
in 3 locations Gross Revenue Profile
Well Diversified Business Mix
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Project Logistics
- # 1 provider in Egypt with 60% market share
- Versatile service offering with multiple sector experience
Leading Positions in Fast Growing Industry Sectors
EGYPROJECT Bonded Storage
- Total area 10k m2, specialized in handling and storing general
cargo, including oversized and heavy lift equipment or packages
- Yard applies international standards, maintaining highest safety,
health, quality & environmental regulations.
ISO Tanks
- #1 provider in Egypt with 70% market share
- New Service with high growth opportunity
Click to edit Master title style Growth in Project Logistics
- Egytrans’ market share in Project Logistics rose to 60% from 35% in the previous
year.
- Main power projects awarded to Egytrans in 2016:
- Beni Suef and the New Administrative Capital Gas Turbine Power stations established by
Siemens, with a total production capacity of 4.8 gigawatts each, representing the largest power stations in Egypt, as well as the largest ever in the history of Siemens.
- South Helwan Power Station, established by Mitsubishi‐Hitachi, with a total production
capacity of 1.95 gigawatts
- Gabal El Zeit II Wind Station, established by the Spanish company Gamesa. This phase
comprises the installation of 130 wind towers.
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Global Transport & Logistics Market 2015/2016
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- Demand for Transportation
and Logistics continues to decrease
- World trade growth declined
to 2.6 percent in 2016 down from 3% in 2015
- Decrease in fuel prices does
not offset decline in earnings
- Airlines and Transport
infrastructure have benefitted most from declining fuel prices and have weathered difficult environment positively
- Shipping companies were the
worst performers within the sector, as they faced their eighth consecutive year of crisis.
Market fundamentals
Long term downside pressures weigh on lackluster economy
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- Ninth consecutive year of crisis for
Shipping Industry due to oversupply of capacity coupled with declining demand
- Containership fleet grew by 8 percent in
2015 which added to the persisting
- vercapacities in the market.
- Subsequently, container freight rates
declined by 30 –40 percent even as scrapping of capacities continued.
- Total net fleet capacity grew by “only” 4.6
percent in 2016, the lowest ever recorded growth of the global containership fleet
- Larger mergers and restructuring efforts
- f shipping companies trend will continue
across the globe .
- The dissolution of Hanjin, one of the
major shipping lines in the world, may balance the supply demand market and improve outlook for 2017 .
Shipping and Sea freight
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- Global air freight volumes
expanded by 2.2 percent in 2015, which was lower than in 2014 according to IATA..
- The falling oil prices and
persistent overcapacities (due to the expansion of belly capacity over the last years) caused a further deterioration
- f air freight rates. The average
monthly decline of air freight rates in 2015 was ‐9 percent.
- The fall in fuel prices means a
mid‐term modal re‐shift of cargo from sea to air freight. Air freight is still largely dependent
- n the state of the global
economy and world trade.
Air Freight
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Transport & Logistics Overview Egypt
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- Foreseen economic and political stability
- A large competitively priced labor force
- Large consumer market
- An ambitious plan for developing
infrastructure across all governorates
- Competitive tax rates
- Preferential access and proximity to key
global markets
- A diversified economy
- Investment and legal reforms to
encourage investments
Egypt’s Economy; GDP vs. Inflation
GDP Growth vs. Inflation (2011/12‐2015/16)
Source: CBE
0% 2% 4% 6% 8% 10% 12% 14% 16% 0% 1% 2% 3% 4% 5% Real GDP @ Factor Cost Headline CPI Inflation
Egypt’s Ideal Geographic Position gives its Logistics Market the Potential to Thrive
- Accounting for 3.1% of GDP
in FY2014/15 (fiscal year running from July‐June), Egypt’s logistics and transportation sector encompasses more than 108,000 kilometers of paved roads, 9570 kilometers of railways, globally ranked airports in all major urban centers, including an air cargo airport of five terminals in Cairo, six seaports on the Mediterranean and nine on the Red Sea, six dry ports and an extensive network of Nile river transport facilities.
Click to edit Master title style Transport & Logistics /GDP
Share of GDP remains constant growing from 4.3 % in 2015 to 4.4% in 2016.
2014/2015 2015/2016
Source: CBE Source: CBE
11.2% 12.5% 15.8% 2.4% 5.1% 9.5% 3.2% 1.7% 4.4% 13.4% 3.9% 0.7% 1.6% 9.7% 4.8% Agriculture, Forests & Fishing Extraction (Oil & Gas) Manufacturing Utilities Construction & Building Real Estate Communication & IT Suez Canal Transportation & Storage Wholesale & Retail Trade Finance Insurance & Social Insurance Tourism General Government Health & Education 11.1% 13.5% 16.0% 2.3% 4.7% 9.3% 3.1% 1.7% 4.3% 13.0% 3.9% 0.7% 2.3% 9.5% 4.7% Agriculture, Forests & Fishing Extraction (Oil & Gas) Manufacturing Utilities Construction & Building Real Estate Communication & IT Suez Canal Transportation & Storage Wholesale & Retail Trade Finance Insurance & Social Insurance Tourism General Government Health & Education
Click to edit Master title style Transport & Logistics
Weight/Implemented Investments increases to 11.4% in 2016 vs 10.3% in 2015
2014/2015 2015/2016
Source: CBE Source: CBE
4.0% 20.9% 12.6% 8.5% 1.2% 11.5% 5.7% 8.2% 10.3% 4.1% 0.2% 0.6% 12.1% Agri, Irrigation & Reclamation Extraction (Oil & Gas ‐ Others) Other Manufacturing Utilities Construction & Building Real Estate Communication & IT Suez Canal Transportation & Storage Wholesale & Retail Trade Finance Tourism Health & Education & Others 4.3% 15.9% 12.5% 5.7% 3.0% 10.1% 6.1% 7.7% 11.4% 4.0% 0.01% 1.5% 17.7% Agri, Irrigation & Reclamation Extraction (Oil & Gas ‐ Others) Other Manufacturing Utilities Construction & Building Real Estate Communication & IT Suez Canal Transportation & Storage Wholesale & Retail Trade Finance Tourism Health & Education & Others
Click to edit Master title style Transport & Logistics Main Growth Drivers
Imports & Exports Suez Canal Traffic
Source: CBE Source: CBE
‐20% ‐15% ‐10% ‐5% 0% 5% 10% 15% 20% 5000 10000 15000 20000 25000 30000 35000 40000 45000 50000 55000 60000 65000 2011/12 2012/13 2013/14 2014/15 2015/16 Imports Exports Imports GR Exports GR
USD mn
‐10% ‐5% 0% 5% 10% 5000 10000 15000 20000 2011/12 2012/13 2013/14 2014/15 2015/16
- No. of Vessels
Net Tonnage (In mntons) Vessels GR Tonnage GR
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Ports and Suez Canal
Suez Canal accounts for roughly 7.5%
- f world sea trade and is one of the
world’s five ‘strategic chokepoints’ through which the overwhelming majority of the world’s oil flows. Egypt has 40 sea ports, of which 12 are commercial ports; six mining ports; six fishing ports; five marinas; and 10 oil shipping ports. Among the most important ports are Alexandria, the biggest port in Egypt, and the Port of Dekheila,. Damietta Port has the largest container terminal and the most sophisticated equipment in the Middle East, while Port Said and Port Suez occupy strategic positions at each end of the Suez Canal. Port infrastructure is also weak and suffers from lack of maintenance of equipment, evidence points to inability to meet the requirements
- f shipping lines due to insufficient
space and water depth to accommodate containers. .
Air Freight
Egypt has 73 airports with paved runways, five of which are international airports. Egypt’s airport development plans are driven by longterm tourism opportunities. The largest and most active airport is in Cairo, being the second‐busiest airport in Africa with direct flights to most countries. There are frequent flights within the country and improvements to the air infrastructure will increase handling capacity and efficiency, which will benefit the transport and logistics sector.
Rail
The rail freight sector’s network is limited and undeveloped its
- perational capacity is stretched to
the limit. Up to 85% of rolling stock is long past its replacement date. Railway connects Cairo and Alexandria with the main towns in the north of the country, all the large towns in the Nile Basin down to Aswan, and Safaga
- n the Red Sea coast. But does not
cover new, important
- rigin/destination flow zones.
Absence of direct links to dry ports and factories and storage terminals is another hindrance. .
Land Transport
Egypt’s roads carry the largest share
- f freight (53%), which increases the
country’s dependence on the maintenance of the road
- infrastructure. 92% of roads are
- paved. But narrow and of poor quality,
network capacity is inadequate, and the vehicles used are mostly outdated. In 2011 the road transport industry comprised approximately 743,000 trucks, most of which are not capable
- f carrying containers, thereby
hampering port‐hinterland container
- transport. These trucks have also been
found unsuitable for carrying specific commodities, mainly agricultural products. Additionally increase in the number of long trailer vehicles, which are not built to standard international specifications and jeopardize road safety.
Poor Infrastructure Slows Tempo of Market Growth. In 2010, Logistics revenues touched $17.04 bn. Government has been unleashing initiatives to make the country a global logistics hub by facilitating business processes.
Click to edit Master title style In spite of this Logistics is a performing sector
The World Bank’s Logistics Performance Index shows Egypt has significantly improved its logistics performance over the past few years, with the country moving from 92nd in 2010 to 49th place out of 160 countries globally in 2016 . In the MENA region Egypt is ranked 6th behind gulf
- countries. Increased efficiency in
international shipments and infrastructure improvements rate strongly in the country’s logistics performance. Notable is that Egypt scored highest in the timeliness sub‐indicators, which measures the timeliness of shipments reaching their destination. On the
- ther hand, the lowest score was
assigned to the customs sub‐indicators, which measures the efficiency of the clearance process.
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Consolidated Financial & Operational Performance 2016
Click to edit Master title style Market Dynamics
- Transport and
Logistics industry in decline globally suffers from
- versupply and
decreasing demand
- Import restriction
locally
- Inflation, VAT and
float impact trade negatively
- EGP float
- Government
spending on mega projects
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- Revenues were up 63.3% Y‐o‐Y to reach EGP 215.5 million
- Costs increased 45.5% to EGP 142.2 million
- SG&A escalated by 26.9% to EGP 32.3 million
- EBITDA recorded EGP 41.1 million compared to EGP 8.6 million a year ago
- Backed by the EGP currency floatation, an exceptional FX gain was recorded
amounting to EGP 44.5 million, this was coupled with an 81% hike in Investment Income to EGP 10.4 million
- Meanwhile, provisions were booked at EGP 24.8 million
- Net Profits after Taxes skyrocketed to EGP 58.7 million vs. EGP 9.9 million in FY
2015
- Revenues from other lines of business were mixed in 2016 affected by the
macro‐economic slowdown
Full Year 2016 Highlights
Egytrans ranked as one of the top 100 performing companies in 2016 by Amwal El Ghad
Click to edit Master title style Consolidated B/S (2015‐2016)
Click to edit Master title style Consolidated I/S (2015‐2016)
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Performance (2010‐2016)
Source: Egytrans consolidated financials
Egytrans Consolidated; Financial Performance
‐20% 0% 20% 40% 60% 80% ‐10 10 30 50 70 90 110 130 150 170 190 210 230 2010 2011 2012 2013 2014 2015 2016 Revenues Cost of Revenues SG&A EBITDA Net Profits Revenues GR In EGPmn
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Performance (2010‐2016)
Source: Egytrans consolidated financials
Egytrans Consolidated; Margins Performance
‐5% 0% 5% 10% 15% 20% 25% 30% 35% 2010 2011 2012 2013 2014 2015 2016 Gross Profit Margin EBITDA Margin Net Profit Margin
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Revenues Details (2015‐2016)
Source: Egytrans separate financials
Egytrans Separate: Contribution by Business Line
Click to edit Master title style ETAL Separate
Click to edit Master title style EDS Separate (figures are in USD)
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Share Performance (2016 – Mar 2017)
Source: Mubasher Indices values are rebased and on a daily basis
Egytrans share price has shown a great performance during 2017 and reached a high of EGP 15.49 (18‐Oct ‐ 2017). Moreover, it
- utperformed all
EGX indices with a 181.1% vs. ‐ EGX30 (YTD of 21.7%) ‐ EGX70 (YTD of 78.6%) ‐ EGX100 (YTD of 79.9%) ‐ EGX20 Capped (YTD of 19.4%)
Egytrans Share vs Market Indices (2017)
Data till 31‐Dec‐2017
4 6 8 10 12 14 16 ETRS EGX30 ‐ rebased EGX70 ‐ rebased EGX100 ‐ rebased EGX20 ‐ rebased Linear (ETRS) Outperforming period
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Strategic Direction
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Our Approach
- Detailed review of operations
- Conducted internal assessment of management, assets, equipment, labor etc.
- Analyzed external factors including customers, markets, competitive environment and
investment opportunities
Situation Analysis
Positives
- Strong operations and leadership
- No structural differences with competitors
- Powerful brand
- Dedicated employees, positive culture
- Strong customer base and relationships
- Opportunities for investment
- Strong balance sheet
- Growing number of clients seeking value
services
- Increased Transport and Logistics
infrastructure
Challenges
- Turbulent global market
- Declining foreign trade
- Fragmented, unregulated competition at
lower cost
- Macro economic instability
- Legal & regulatory environment
- Lack of clarity in government planning
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Accelerate Profitable Growth Close the Gap – Operational Excellence Introduce Differentiated Services Accelerate Profitable Growth
- Grow high value
services
- Grow account share
with large customers
- Penetrate new markets
Strategic Direction
Close the gap
- Operational Excellence
- Efficiency in utilization of working capital
- Lead industry in safety and security
- Exceed customer expectations
- Increase operational productivity
- Achieve competitive margins
Introduce Differentiated Services
- Launch high value
differentiated services
- Leverage and integrate
new technology solutions for logistics and operating systems
Egytrans delivers best in class transport and logistics services with a strategy that rests on three pillars to deliver long‐term profitable growth
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Industry Outlook
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Growth by subsector Considering individual subsectors, ports are predicted to grow the fastest at 5.8% on average per year over the forecast period, while airport investments are expected to slow down to an annual growth rate of 2.6%. Roads will likely remain the biggest area of investment, especially for growth markets. This is partly due to the rise in prosperity and, hence, car
- wnership in developing
countries.
Global Outlook to 2025
Transport infrastructure investment is projected to increase at an average annual rate of about 5% worldwide over the period of 2014 to 2025.
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Roads still make up the largest subsector for transport spending in the Middle East. The rate of car
- wnership is
expected to increase sharply
- ver the coming
decade; consequently, the investment in roads is expected to increase as well – by almost 116% over this period to reach $31bn per year by 2025.
Global Outlook to 2025 Growth by region
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- During the upcoming 5 years we expect incoming mega energy & power projects announced
by the government, including El Daba’a nuclear station construction, expansions in wind and solar energy plants and the increase of electricity capacity by 30,000 megawatts via new plants to be added to the national grid.
- Moreover, Oil & Gas and Petrochemical projects will enhance and boost the T&L sector
(Projects LoB). Total expected investments for the aforementioned projects are USD 76.1 bn*, of which USD 28.6 bn* as signed contracts and the rest is MoUs.
- One of the major growth drivers is a possible increase in river transport business in line with
the government plan to reach 10% of the cargo transported locally via river. River transport via barges and ports operations and management has high profitability margins but there are many challenges remaining.
- Suez Canal Development Zone projects which offers a bundle of investments in ports,
logistics and maritime related activities. Moreover, there are other projects in infrastructure, industrial & manufacturing, ICT and business parks.
Egypt Transport & Logistics Outlook
* Figures are extracted from EFG‐Hermes economy & strategy report “Wrapping up a successful EEDC” dated March 25, 2015
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Egytrans Outlook
Click to edit Master title style Positive Industry Outlook
- Increasingly stable operating environment.
- Economic conditions are still challenging but this creates opportunities for
well‐capitalized and experienced companies like Egytrans.
- There continues to be strong potential in the transport and logistics
market in Egypt and we believe the value of our brand equity will continue to set us apart from the competition.
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- Accelerating cash flow due to EBITDA growth
- Higher margins backed by higher operational revenues in line with an
improved Cost/Revenues ratio
- Enhanced Return on Assets and Return on Equity ratios
- Considerable FX gain resulted from EGP floatation effective November 3rd
2016
- Escalating net profits Y‐o‐Y reflecting the overall operational performance
Strong Financial Position
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- Given the expected huge investments in the sector which will offer great
- pportunities for Egytrans to invest and participate in either directly or via
- perations.
- Expanding regionally, there is huge potential in the Libyan market during the
stage of reconstruction if stability and security are recovered.
- Government plans to expand heavily in exports which will help Egytrans to
increase its volume of regular business like Sea Freight, Customs Clearance and Consolidation LoB.
- Egytrans added new Bonded Warehousing LoB in Al Adabeya (Suez
governorate), which will add a considerable value.
- ETAL added new crane equipment enabling it to expand considerably on its
Lifting & Installation activities
Outlook For Egytrans
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- Egytrans is considering potential projects, which are still undergoing technical and
feasibility studies to be announced once studies are finalized. Among these are:
- Expanding Warehousing services and/or 3PL (Locations to be decided)
- Expansion on EDS capacity & locations
- Exploring opportunities in Inland transport
- Growing YoY market share in Projects LoB, which is anticipated to grow over
the next few years with the expected higher demand in mega projects inflow to Egypt
- Has a clear strategic plan for the next 5 years in order to enhance revenues and
- profitability. The plan includes expansions into new LoB within EGYTRANS in
addition to entering new businesses that are related to Transport & Logistics via new subsidiaries or existing ones.
- Good utilization of finance proceeds that are invested in expansions or new
projects after a comprehensive and extensive feasibility study through a specialized team.
- Given the company’s large market share in the Projects LoB, it is expected that
Egytrans will strongly participate in these projects as proved by its extensive and successful track record.
Outlook for Egytrans
Click to edit Master title style Egytrans Outlook Consolidated; Financial Performance
Source: Pharos ‐ Egytrans Valuation Update Report / 14 Jan 2018
‐30% ‐10% 10% 30% 50% 40 80 120 160 200 240 280 320 360 2017 2018 2019 2020 Revenues Cost of Revenues SG&A EBITDA Net Profits Revenues GR Net Profits GR In EGPmn
Click to edit Master title style Egytrans Outlook Consolidated; Margin’s Performance
0% 5% 10% 15% 20% 25% 30% 35% 40% 2017 2018 2019 2020 Gross Profit Margin EBITDA Margin Net Profit Margin
Source: Pharos ‐ Egytrans Valuation Update Report / 14 Jan 2018
Click to edit Master title style Egytrans’ Plans for 2017
- We continue to focus on enhancing cost‐effectiveness and
implementing best practices to grow returns
- Developing new services for existing and new customers is a
key deliverable at the core of the strategy.
- Other investments in transport and logistics are under study.
Click to edit Master title style Egytrans’ Plans for 2017
- This new Line of Business
is expected to:
- Reduce outsourcing
costs
- Improve margins
- Enhance cash flow
- Increase operational
control for critical cargo
- Integrate company’s
- verall supply chain
services
Egytrans is in the process of launching a pilot project in‐land transport to compliment its line of business in that area. New activity comprises 5 container trucks as a start‐up fleet for regular container transport with potential for further expansion.