Al Fajar Al Alamia Company SAOG (AFAI) Earnings Call Transcript & Summary

[Foreign Language] Again, I will repeat in English. We are welcoming all the investor in the Investor Annual Meeting 2025. And we are welcoming everyone here, and we are welcoming any questions from any investor. Mr. Mohammed, the CEO of the company, will introduce our financials for this year and we'll then give the chance for everyone to ask any question or having any clarification about it. Mr. Mohammed, please.

Good afternoon, everybody. This is a very good initiative perhaps from the Capital Market Authority of having this periodic meetings between the companies and the public and the shareholders in the general, to give all the stakeholders idea on the progress and on the performance to the company every 6 months. In the meeting, Mr. Murugan is handling the accounts of the company, the Financial Controller of the company. Next to him is Mr. Yaqoub Mammary, who made the introduction, the Chief Corporate Officer and the Chief Technical Officer. Next to me is Mr. Mohammed [indiscernible]. In this presentation, we will try to touch into the major results and for the fiscal year '24-'25, which is ended in June 30, 2025. And we will highlight some of the achievements and some of the results that took place over the year. Of course, we did our first 6 months, and we give some brief at that time, and we continued on the same level and did the same progress. So in general, we will go through a simple quick presentation, and then we will be delighted to hear or to receive any questions or any inquiry about the performance in general. So in general, punchline or the summary of the performance for the 2024 is that with God grace and with the good work and dedication of all the team and everybody around the company of bankers of Capital Market Authority and of employees, of course, and management and Board of Directors, the company turned around in full for the Oman operation, and we managed to achieve very, very good performance in Oman driven by the very good demand and the company's ability to regain its position and its market share and the performance. So for the 12 months, Oman have shown a very, very good growth. Overall, growth in revenues was only 10% because...

Some of the gentleman, please, will you mute. Okay. You can mute from your side to make sure that don't make an echo.

Okay. So we were talking about the overall growth in revenue was only 10% in spite of more than doubling the revenue from Oman or more than a good percentage of growth, but the 10% is the average of what has happened in Oman and in the UAE. In the UAE, the situation was different a little bit, over the full year almost from July until December or even January. There was no drilling and blasting activity due to some technical issues related to the blasting license of the subsidiary in the UAE, which has been overcome and the performance changed. And now the company start gaining its -- and signing its contracts. So within the first quarter, we will see that even in the UAE operation is picking up, and it's moving in a very good way. So to go into an overall result overview and to highlight -- next page, Murugan -- to highlight the important thing and the important at the group level, our EBITDA earnings before interest and tax and amortization was almost OMR 1 million, OMR 970,000 to be precise. That's compared to a negative EBITDA of around OMR 350,000. So for this year, on operational level on cash level, the company managed to generate profit and to achieve. Of course, this profit was overtaken by the other interest and other depreciation and noncash items. The Oman operation alone achieved an EBITDA of around OMR 2.7 million, which is very, very good and in line with our projection or what we are targeting, and it's almost on the budget that was budgeted for Oman, that was resulting from mainly the drilling and blasting activity that touched around [ OMR 7.7 million ], which is compared to OMR 4.5 million for the previous year. And that's the stronger growth that we have achieved, and we are expecting that it will continue on a very good growth for this fiscal year. Now the UAE where the performance was not as good. We all know that this year, it will go back to the operation, and we saw results already in the first quarter, and that will be start reflecting in the financial performance. Also of the other good achievements in Oman side was the mineral development, our gypsum quarry, our minerals achieved 37% growth over the previous year with a very good increase of the efficiency and the profitability for the company and that company now in a profit achievement on that. To go into more details of the P&L or of the financial situation and to make a comparison, I'll focus on the group level. The growth of revenue was 10% growth year-on-year compared to -- yes, reached OMR 10.3 million compared to OMR 9.3 million. And it's always very important to highlight that the OMR 10.3 million was achieved solely or more than 90% of that from the Oman operation versus OMR 9.4 million was achieved from Oman and in the UAE for the last year. The direct costs were reduced by 5% for some of the initiatives to control the cost. But the major cut in the cost was in the overall cost, we achieved a very good reduction and so many of our fixed expenses. The company achieved profit -- loss from the operation of almost OMR 300,000 versus OMR 1.7 million of the previous year. And our major concern always is the financing cost, which is still almost 14% of our revenues, and that's around OMR 2 million. And this is what led the company then to achieve a net loss of OMR 2.7 million compared to OMR 3.6 million in the previous year. In general, these are the major performance. It's reflecting that the company is going on the right track and on the right direction. And we believe that the mission have been completed or done and the company in a very good position in Oman operation. And with the follow-up of the UAE, we will be able to do. Of course, there is so many leads or issues that lead to that performance. And there are some other factors that's impacting the industry over these 2 years. One of them is some major changes in the industry and utilization of application of the explosive itself, moving from package cartridges and emulsion in the UAE to move to bulk. This is very important, more restrict of the compliance requirement and construction for Oman. There is a few things that we can touch while we are discussing or if there's any queries about that. I looked at the last 5 quarters results, you will see that there is a progress, and we are moving in a very, very good way, especially that on the revenue, of course, and of course, on the control of the trust in general. Our future outlook remains very, very positive, knowing or living in the situation whether in Oman or in the UAE, we are confident that we will be regaining our pioneer position in both markets within this fiscal year, the drilling and blasting in general, is showing a very good growth and very good potential with so many of the long-awaited projects are starting and are completing and our order book is very healthy and a very good level in Oman, of course. And in the UAE, we already in the first quarter of this year signed almost 12 new contracts, which were with us a year ago. And now after we resumed the operation and the blasting there, our customers are coming back to us. And with the new infrastructure projects, major infrastructure projects that's coming, we are knowing that there will be a very good market share for our subsidiary in the UAE. The most important elements that we are putting a lot of attention and focus now in the UAE is the explosive manufacturing process, our facility at Geodynamics, our facility -- explosive manufacturing facility and CG and Fujairah is completed, and we are very delighted to announce that we will start the production by the end of next month, where we will have our first production. Currently, we are funded -- feeding our operation there by exporting explosives from Oman to the UAE and use it for the wars -- for the blast. But from next month onwards, we will be able to produce our explosives directly in the UAE and that will achieve a significant cost reduction and cost cut. The very important highlight that will start with -- for us with -- which will start with the first quarter of next year, that's the shifting from bulk to -- from direct ANFO to bulk explosives. And that will lead to a kind of good -- we will be one level ahead of all the competitors. We ordered our bulk factoring facility in -- from MAXAM from our technical partner MAXAM and now currently is under production at its division. Our facility should be able to produce the metrics and the bulk emulsion directly and feeding the new technology that UAE is shifting and adopting. And as we progress, we will be the first factory in the UAE who will be on the full compliance with the requirement for the Ministry of Interior. With this, we believe that this year with the recovery of the UAE operation and coming back to the operation, we will be able to see a very good. And this year, we are targeting even with the high interest is still the high interest where rate and financial costs, we are expecting that we will be able to deliver bottom line in black this year. A very important point also to highlight and to touch at the end of this presentation before we open the floor for question and answers is the commitment -- the divestment plan that we announced for reducing our financial exposure is progressing well. We are in advanced discussion with several parties to dispose some of the noncore investments that we have under our fold and the focus in our core where is the production of explosives and the utilization of it in the drilling and the blasting will be focused. So we are trying to shift out from the mining to be a service provider for it and not directly investment -- investors on it, plus some other initiatives that we are taking to reflect in general to lower our exposure to the banks, and that will lead to less interest, of course, and that will make us in a better position to achieve the profitability at the end. With this summary presentation, I think we covered most of the important aspects of that, and we are delighted to hear any comment or any inquiry from any of the stakeholders or whom with us in the room or even if there is any query the company through the official communication channels as presented or as directed by the Capital Market Authority, the Financial Services Authority, we are delighted to receive that now or later after the recording. The recording of the session, of course, it will be available online, and we are happy to receive any inquiry through these channels at any time. So I'll keep the floor now for any questions or comments, and we will be delighted to get any feedback or any query to answer it.

Thank you very much to the CEO for the comprehensive presentation. As we have seen this year has been full of achievement and challenges, and we are today looking forward to hearing your views and suggestions if there is any. And we are open also for any queries, for any e-mails, you can send emails, you can reach it to the company as you wish, there is official channels in our website. [Foreign Language] Any questions? Okay. So thank you very much, Mr. CEO. Thank you very much for everyone. And -- we are -- we will conclude this meeting. And as we have mentioned, we are ready to receive any questions and inquiries through the official channels, communication channels or through direct calls to the company. Thank you very much. [Foreign Language] Thank you. That's it.