Aamal Company Q.P.S.C. (AHCS) Earnings Call Transcript & Summary

Hello, everyone. This is Laura from the Corporate Communications team of Aamal Company. I hope everyone is doing well today. I want to welcome you all to Aamal Company's 2024 Year-end Financial Results Investors Call. On this call, we have Mr. Mohammad Arif, the Accounts Manager; and Mr. Zaid Shelleh, the Investor Relations Manager at Aamal Company. We will conduct this call with first, Mr. Zaid presenting the company's results on behalf of the management, followed by a question-and-answer session, answered by Mr. Arif. Mr. Zaid, please proceed.

Can everyone hear me, please? Can you hear me, Laura?

Yes.

Good afternoon, everyone. Welcome to this presentation of Aamal Company results for the year ended 31 December 2024. I'm Zaid Shelleh, Investor Relations Manager at Amal, and I will be leading today's presentation alongside Mr. Mohammed Arif, Aamal's Account Manager. After the presentation, we will both be available to answer any questions you may have. Accompanying this call is a short presentation available for viewing and download from Aamal's website. I will begin by summarizing the highlights of Aamal's 2024 results as set out in Slide 2 of this presentation. We delivered a strong performance in 2024, achieving impressive net profit growth of nearly 18% and an increased year-on-year revenue despite the challenging market dynamics and uncertainty faced during the period. These results once again highlight the strength and resilience of Aamal's diversified business model with robust performance delivered across all Aamal's segments, including particularly positive results for Industrial Manufacturing and Managed Services. We faced a number of challenges during the year with less demand in certain markets and the fall in revenue that stemmed from the completion of Aamal Cables contract. Despite these challenges, we were able to successfully drive commendable profitability growth, leveraging leading regional partnership and involvement in major energy and construction projects to remain on a strong footing. Here, the significant contract wins for Elsewedy Cables, each valued at over QAR 1 billion and substantial contribution of MMS were particularly encouraging developments. Throughout 2024, Aamal maintained its strong focus on delivering long-term growth through sustained investments in operational involvements and the execution of proactive measures to navigate challenges. Numerous positive steps were taken across the portfolio to enhance the competitive position of our businesses, expand the product offering and enter new regions and high-growth markets, both locally and in the wider region. We also reinforced commitments to ESG and sustainability with several actions taken to support the welfare of our employees and communities and minimize the environment impact on our operations. Looking ahead, Aamal is well positioned to benefit from the wide range of opportunities related to upper strong growth outlook, which continues to be supported by the progressive actions being pursued under the government's third national development strategy. Turning to Slide 4 and our 2024 financial highlights. Despite the challenge posed by evolving market dynamics, we are pleased to note that revenue increased by 1.1% with double-digit net profit growth of 17.7%. Revenue growth across Trading and Distribution, Property and Managed Services segments successfully offset the significant reduction in revenue recorded by Industrial Manufacturing, which was adversely impacted by lower demand in key markets and the completion of the project of Kaharama in 2023. The robust profitability improvements at the Industrial Manufacturing and broadly stable high profit in the Property segment, in turn, supported the strong overall net profit growth. CapEx for the year increased by 10.8%, primarily due to investments in renovation and upgrades of our property assets, including upgrades to fire safety systems as well as retail experience and accessibility enhancements at the City Center Doha. Our balance sheet remains robust with gearing remained low at 2.52%, up only by 11 basis points year-on-year, and we remain committed to financial prudence and the maintenance of healthy balance sheet. In light of Aamal positive 2024 performance and robust financial position, the Board of Directors is proposing a 6% dividend to be provided -- to be approved by the general assembly at the company's next AGM scheduled to take place on 25 March 2025. Turning to Slide 6 and each of our segments. In our Industrial Manufacturing segments, a resilient performance was delivered in 2024 with prudent initiatives enabled -- enabled to deliver strong net profit growth of 38.1% year-on-year, reaching QAR 61.8 million. This impressive performance was achieved despite less demand in key markets and significant 52% reduction in year-on-year revenue from the completion of Aamal Cables contract in 2023. Senyar Industries leveraged its involvement in major projects with Kaharama and North Field to generate high sales volumes. In quarter 2, Elsewedy won another contract with Kaharama valued at QAR 1 billion, while Doha Cables achieved QAR 225 million of export sales. Both businesses are also investing in new capabilities to ensure they can meet the full spectrum of future transmission network requirements, including supply cables up to 400 kilovolts. Amal Readymix and Aamal Cement Industries both benefited from the rising demand related to the mobilization of construction projects, particularly in quarter 4 of 2024. In response to gross profit margin pressure, Aamal Cement continued to expand its capability into new product types while also establishing a new recycling facility to process waste from -- to process waste for reuse and repurpose nonconforming products. Ci-San, which was acquired in full by Aamal in 2024, also benefited from the improvement demand environment with high shipping rates and stable charter occupancy. Following the ownership transition to Aamal, Advanced Pipes & Casts Company continued to undertake key strategic initiatives to introduce [Indiscernible] standard products aligned with evolving industry standards, helping to secure approval for major projects, particularly in Ras Laffan. Aamal also increased its ownership in Frijns to 40%, while the company continued to win new contracts and expand its operations, particularly in energy sector. Aamal's acquisition of APC, CI-San and additional shares in Frijns Middle East underscore the company's confidence in the growth prospect of the segment, which remain well positioned to capitalize on strong demand for key regional sectors. Turning to Slide 7. Our Trading and Distribution segment delivered mixed results, reporting a revenue of QAR 1.48 billion, up 12.5% increase for 2024, but a 10% decline in year-on-year net profit owing largely to the subdued performance of Aamal Medical. Ebn Sina Medical contributed substantially to the segment's revenue increase, benefited from the high demand for the public hospitals while renewing key contracts and expanding into private health care. The business also introduced innovative new treatment, expanding its solutions offering within oncology, rare diseases and generic disorders. There are also currently -- there are also currently 2 new warehouses under construction in Manateq to increase growth capability and improve operational efficiencies for the company. Amal Medical experienced a decline in revenue and net profit due to delivery delays. The business was nonetheless able to successfully sign numerous strategic partnerships, some of which Austo Healthcare, Health O Meter, Avey AI and Gleamer. With these collaborations, enhancing partners care and the patient care in Qatar through AI-driven solutions and radiology innovations is promising. Aamal Trading and Distribution reacted to market challenges related to projects and shipping delay through the application of successful sell-out promotions and price increase on renewal service contracts. The expansion of its entire portfolio with 2 new brands as well as the new digital customer service concept toolbox create a strong footing on which continue growing market penetration into 2025. Moving to Slide 8 and the performance of our Property segment. Aamal Property segment delivered broadly flat results in 2024, reporting revenue of about QAR 328 million, a 3.1% year-on-year increase. The net profit down 2.2% to reach QAR 250.5 million. City Center Doha has shown robust revenue growth due to strong leasing and occupancy rates, signing new tenants and increased lease terms, though an increase in impairment provisions and utility costs led to a marginal drop in net profit. During the year, City Center certain welcomed over 30 new shops and kiosks, adding nearly 4,000 square meters of leased space. The opening of the Metro bridge was also a major development, helping the drive the increased footfall through the enhanced accessibility of visitors. At Aamal Real Estate, ongoing renovations led to a drop in occupancy rates, slightly reducing revenues and net profit. However, Aamal is confident that those improvements will enhance portfolio attractiveness, maintaining high occupancy rate and rental fees with full tenancy in Madinat Khalifa and Al Nasr expected to be at full by quarter 1, 2025. Looking ahead for the sector, Aamal's property portfolio remains highly attractive for tenants seeking prime location in Qatar. And we are confident that recent investments in quality upgrades will further enhance its appeal to ensure leading market position into the future. Turning to Slide 9 and our final segment, Managed Services. Aamal's Managed Services segment recorded an exceptional performance in 2024, delivering a 55.4% increase in revenue and a 55% increase in net profit year-on-year. These results were driven largely by Maintenance Management solution, which undertook targeted expansion to extend major contracts and to win new business across hospitality, amusement and real estate sectors. The investments in its own fit-out team and focus on smart technology-based solutions also position MMS very well as it took -- as it looks to capture opportunities across new sectors. ECCO Gulf faced sustained revenue pressure from competition, inflation and increased labor costs in 2024. In light of these challenges, the business has adopted focus on cost optimization, service quality enhancement, new industry targeting and training programs for its team for 2025. It also strengthened its digital transformation partnerships with [Indiscernible] Solutions and [IST] while exploring expansion opportunities in Oman and achieving important certifications related to information security. In 2024, Aamal Travel expanded to offer international visa assistance and budget holiday packages. Despite challenges for the airlines and hotel bypassing intermediaries, market stabilization is expected in 2025, with Aamal Travel aiming to acquire new corporate clients and expand inbound packages by leveraging its Qatar tourism affiliation. To summarize, Aamal is pleased to have delivered a strong set of results for 2024, reiterating the group ability to navigate challenges and capitalize on emerging opportunities across diverse markets and sectors. The progress made in 2024 in combination with the inherent resilience and agility of our business model position us very well to seize opportunities in 2025 and beyond. We continue to maintain leading presence in fast-growing sectors across IT, energy, construction and health care. The recent acquisition of Ci-San, Advanced Pipes & Casts and additional shares in Frijns Middle East underscore our confidence in the region while providing Aamal with enhanced exposure for future demand growth. At the same time, we remain committed to investing further in our people and operational efficiency to ensure that we can continue offering high-quality and innovative products and services. The growth outlook for Qatar remains very positive. As the country continue to work towards Qatar National Vision 2030, we are confident that the government strategy will continue to unlock new opportunities for Aamal and others to generate long-term sustainable value for all its stakeholders and communities in the years to come. This concludes our presentation. Mr. Arif and I now kindly welcome any questions you may have. However, we will start with the Arabic presentation. Dear Ms. Laura, could you please open the Arabic presentation? [Foreign Language] Thank you. This concludes our statement. This concludes our presentation, and we welcome any questions you may have.

Thank you, Mr. Zaid. Thank you everyone. [Operator Instructions] Yes, please. Mr. [Indiscernible], please go ahead.

I just wanted to ask a quick question about the Industrial sector. When -- could you give sort of like any indication to when we could expect kind of the significant increase in flow-through from the North Field projects to come through? Like, should we expect to see it in '25 or '26?

[Indiscernible]

Yes, Sorry, I couldn't quite hear what you said.

We said 2.5 years, [Indiscernible] months.

Okay. I see there are no further questions. Thank you, everyone, for joining us today. This concludes today's conference call. You may now disconnect.