TGCC, in line with its business plan, discusses its fight against input inflation

During its press conference, the group’s management presented the good results from the first half of the year and described the measures taken to combat the increase in the price of raw materials. TGCC has made no secret of its continental ambitions, indicating that major projects will be announced by the end of the year. Its revenue in this area should triple within two years.

This Thursday, September 29, 2022, the TGCC Group organized a press conference at its Casablanca premises to present its results for H1-2022. He presented the strategy put in place this year to counter the galloping inflation that took hold of inputs and talked about the development of his order book and his African ambitions.

Despite the gloomy economic context and the increase in input prices weighing on margins, the group posted healthy indicators at the end of June 2022. Operating earnings increased by 61% to 2,334 MDH compared to the same period last year. The group explains that this increase is due to three main factors, namely: the start of new projects, the continuation of operational activities on the grounds whose progress had been affected by the health crisis at the beginning of 2021, and the increase in power of national and international subsidiaries.

EBITDA grew by 35% to 217 million dirhams following the increase in operating income and good cost management. ultimately, the group’s net income for the period increased by 47% to 94 million dirhams, which is explained “by a control of financial costs and the reduction in corporate tax after the IPO”, states TGCC.

The chairman and founder of the group, Mohammed Bouzoubaa, indicated that “these half-year performances are in line with our business plan, which was presented during the IPO. I can tell you that I am absolutely confident in this year’s results. We will certainly respect , or even do better than our 2022 forecasts”.

The group had to deploy an arsenal to combat the rise in the price of its inputs to maintain its margins.

Logistics and production optimization introduced to mitigate inflation

Since the end of June, the inflationary trend on the group’s inputs has not really calmed down. In the words of the president, “steel has risen sharply since the beginning of the war in Ukraine, rising from 6 dirhams per kilo to 11 dirhams, now it is on a slight downward trend to just under 9 dirhams. Aluminum, glass and wood for formwork and carpentry are still in advance”.

The group had to implement various optimization schemes to limit the impact of inflation on its margins. “These price increases mainly affected our strategic inputs and from the end of February we had to act quickly and find more levers to mitigate this increase,” explains Asmaa Abaragh, Deputy Director of Support Functions at TGCC.

From a financial and production point of view, the group has done what is necessary. He kept to psecure your supply so as not to slow down the pace of production. “We have tried to find a number of initiatives to improve the entire logistics cycle. We have done early inventory management on some of our inputs,” says Asmaa Abaragh.

To limit the risk of impact on margins, “we have had an approach with our customers which aims to share responsibility for this impact by having regularizations in our current markets”, she clarifies. TGCC has also worked to optimize and reduce its structural costs and limit unnecessary expenses. The group had to optimize the use of cash. “We had to have a management of our WCR, whether it concerns our recovery of our receivables from sales and also the management of our payments to our suppliers”, continues the deputy managing director. TGCC has also announced that it has frozen recruitment deemed non-priority to limit the effects of inflation.

In this sense, Mohammed Bouzoubaa explained in an interview to Médias24/LeBoursier last July: “We have always worked spot on, over a period of one and a half or two months, for example on steel. The advantage we have is to work with many people, whether it is customers, suppliers or sub-contractors. All the sub-contractors did not want to directly affect the inflationary burden on TGCC and therefore the impact is less than one might imagine. »

Considering the results presented, overall, limiting the impact of inflation has paid off. The same applies to the group’s international development, which is going well at the end of June.

Turnover in Africa south of the Sahara multiplied by three within two years

The group’s chairman announced from the start that the prospects for this geographical area were very interesting. “We are in the process of finalizing a lot of projects and we cannot tell you about them in detail because it remains confidential until the signature”, indicated Mohammed Bouzoubaa. An announcement which was to take place before the end of the year and which would concern major projects. “They will definitely triple our revenue in Africa within two years at the most”, revealed the president of TGCC.

The group is mainly present in Ivory Coast and Senegal. During a previous interview, the founder of the group confided to us: “I think that in the long term 10% of our turnover will come from these markets. This has happened since the end of June, when the international turnover reached 10% of the group’s total revenue, compared to 7% in the first half of 2021.

The region is therefore experiencing a very strong dynamic, on which the management expects to increase the order book. Up 4.5% to 7.2 billion dirhams at the end of June, “the goal is to have just over a billion additional dirhams in the order book by the end of the year. It is a goal that we can achieve”.

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