Posted on July 31, 2018

The Board of Directors of Aamal Company Q.P.S.C. (Aamal), one of the Gulf Region’s fastest growing diversified companies, today announces its financial results for the six months ended 30 June 2018.

Financial Highlights

  • Group revenue down 33.0% to QAR 652.7m (H1 2017: QAR 974.5m), primarily due to the reclassification of two business entities within the Industrial Manufacturing segment from subsidiaries to joint ventures from 1 April 2017, with a consequent change in their accounting presentation
  • Gross profit down 20.6% to QAR 243.2m (H1 2017: QAR 306.2m)
  • Net profit before share in results of associates and joint ventures accounted for using the equity method (“net underlying profit”) down 27.0% to QAR 176.2m (H1 2017: QAR 241.5m)
  • Net underlying profit margins have increased by 2.2 percentage points to 27.0% (H1 2017: 24.8%)
  • Share in results of associates and joint ventures accounted for using the equity method more than doubled to QAR 53.9m (H1 2017: QAR 25.0m)
  • Total Company net profit1 down 13.7% to QAR 230.1m (H1 2017: QAR 266.6m)
  • Reported earnings per share down QAR 0.02 to QAR 0.36 (H1 2017: QAR 0.38)
  • Net investment in capital expenditure increased by QAR 168m to QAR 218.8m (H1 2017 QAR 50.8m), reflecting enhancements to the Company’s real estate portfolio through the acquisition of a number of prime residential assets

1 Total Company net profit is before the deduction of net profit attributable to non-controlling interests

H.E. Sheikh Faisal Bin Qassim Al Thani, Chairman of Aamal, commented: “While it has been a challenging first half of the year due to the ongoing Qatar border blockade, I am pleased to report a highly respectable set of results, yet again demonstrating the resilience of Aamal’s diverse business model.

“It is important to note that as highlighted in previous quarters, the reported year-on-year declines do not accurately reflect the financial reality of Aamal’s performance. These numbers are not like-for-like comparatives due to a change in the accounting presentation of two subsidiaries within our Industrial Manufacturing division which were reclassified as joint ventures. This means they are no longer consolidated on a line-by-line basis, but instead through the equity method. “We have also devoted considerable time and effort to further enhancing our corporate governance mechanisms, so ensuring that Aamal’s leadership will continue to drive and deliver long-term excellence. We have now finalized the restructuring of our Board with key changes including the addition of three independent directors. I am confident that the breadth and depth of experience provided by these individuals’ positions the Board extremely well to lead the Company forward.

BREAKDOWN BY DIVISION

(N.B. there may be slight differences due to rounding)

  • REVENUE

QAR m

H1 2018

H1 2017

Change

Industrial Manufacturing

119.1

477.3

(75.0%)

Trading and Distribution

353.5

308.9

14.4%

Property

149.4

153.6

(2.7%)

Managed Services

48.1

48.1

0.1%

less: inter-divisional revenue

(17.4)

(13.3)

31.3%

TOTAL

652.7

974.5

(33.0%)

  • NET PROFIT

QAR m

H1 2018

H1 2017

Change

Industrial Manufacturing

56.3

72.9

(22.7%)

Trading and Distribution

60.1

59.6

0.8%

Property

122.9

127.1

(3.3%)

Managed Services

4.8

3.1

58.4%

Head Office

(14.1)

3.9

(465.4%)

TOTAL

230.1

266.6

(13.7%)

DIVISIONAL REVIEW

(N.B. there may be slight differences due to rounding)

  • INDUSTRIAL MANUFACTURING

QAR m

H1 2018

H1 2017

Change

Revenue

119.1

477.3

(75.0%)

Net profit

56.3

72.9

(22.7%)

Made up of:

 

 

 

Net profit: fully consolidated activities

4.9

50.8

(90.3%)

Net profit: share in results of equity accounted investees

51.4

22.1

132.6%

Net underlying profit margin %

(i.e. excluding share in results of equity accounted investees)

4.1%

10.7%

(6.6 ppts)

Overall, revenues for Industrial Manufacturing fell by 75.0% and overall net profit by 22.7%. This is largely attributable to the changes in accounting treatment for Senyar Industries and Advanced Pipes and Casts Company, both of which are now accounted for as joint ventures having both previously been consolidated as subsidiaries. We are delighted to report that Aamal Readymix made significant progress against its expansion plan. Additional stock piles are now complete (increasing the raw material inventory capacity by 100%) and a number of its facilities have been upgraded, including the addition of a new central operations control building and the installation of a new recycling plant. Aamal Readymix is also pleased to have successfully met its CSR target of 0% dust emissions.

Aamal Company financial results 2 [qatarisbooming.com].jpg

  • TRADING AND DISTRIBUTION

QAR m

H1 2018

H1 2017

Change

Revenue

353.5

308.9

14.4%

Net profit

60.1

59.6

0.8%

Net profit margin %

17.0%

19.3%

(2.3 ppts)

In our Trading and Distribution division, revenue increased by 14.4% and profit by 0.8%. This reflects our achievement in establishing vital agreements with key businesses and suppliers, as well as successfully overcoming issues associated with the Qatar border blockade.

We are pleased with Ebn Sina Medical’s new business partnership with Amryt Pharmaceuticals which allows us to supply the local market with vital medication for treating a rare, life-threatening disease. Ebn Sina Medical, the largest business in this division, has also established partnerships with several new suppliers and successfully opened its Ebn Sina Pharmacy. Meanwhile, Aamal Trading and Distribution is delighted to announce that an agreement has been signed with UBER to provide all vehicle maintenance services.

  • PROPERTY

QAR m

H1 2018

H1 2017

Change

Revenue

149.4

153.6

(2.7%)

Net profit

122.9

127.1

(3.3%)

Made up of:

 

 

 

Net profit: fully consolidated activities

120.4

124.1

(3.0%)

Net profit: share of equity accounted for investee net profits

2.5

3.0

(17.14%)

Net underlying profit margin %

(i.e. excluding share of equity accounted investee profits)

80.6%

80.8%

(0.2 ppts)

Revenue in our Property division fell by 2.7% and profit by 3.3%. This was mainly attributable to the redevelopment work at City Center as a large retail space was closed for redevelopment.

Property has, however, seen a number of successes despite a challenging backdrop. Firstly, in our City Center Doha shopping mall, we have successfully established and opened new direct connections between the shopping mall and key hotels including the Marriott, Shangri-La and the Rotana. Furthermore, the refurbishment of the East Food Court is now 90% complete and fully leased out. In Aamal Real Estate, there has been a 10% increase in revenue primarily due to the acquisition of new properties, as announced earlier in 2018.

  • MANAGED SERVICES

QAR m

H1 2018

H1 2017

Change

Revenue

48.1

48.1

0.1%

Net profit

4.8

3.1

54.8%

Net profit margin %

10.0%

6.4%

3.6 ppts

While revenues remained flat, the growth in net profit is attributable to our flexibility to adapt to the change of customers’ behavior and demands. While this has placed increased pressure on revenues, Aamal Services has undertaken a full review of expenditure and has focused on renegotiating contract rates and developing additional service lines such as Aamal’s pest control business. As a result, we have ensured that profitability has been maintained, increasing net profit by 54.8% year-on-year and boosting profit margins by 3.6 ppts.

SUMMARY AND OUTLOOK

H.E. Sheikh Mohamed Bin Faisal Al Thani, Vice-Chairman and Managing Director of Aamal, commented: “The diversity of our business model, combined with our tenacity in grasping both organic and non-organic growth opportunities as they arise, particularly those offered by Qatar’s ongoing industrial development, has helped us to both reinforce our strong market position in key sectors and to support Aamal’s resilience and development. We remain well-positioned to look forward to the future with confidence”.

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