Al Mahhar Holding Company Q.P.S.C. (MHAR) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. My name is [ Hamze ], and I will be your host for today's investor conference call to discuss Al Mahhar Holding financial results for the year 2024. Thank you all for joining us. Let me introduce our speakers for today's call, Mr. Enzo Dellesite, CEO; and Mr. Sunil Kumar, Director, Finance and Corporate Affairs. At the end of the presentation, we will open the floor for the questions and discussions. Please feel free to ask any questions related to the topic. Now, Mr. Enzo will present the financial results for the year 2024.

Thank you, Hamze. Good afternoon, everybody, and welcome to the Al Mahhar Holding 2024 Earnings Conference Call. We sincerely appreciate you taking the time to join us today. My name is Enzo Dellesite, I am the CEO of Al Mahhar Holding. Over the next few minutes, I'll walk you through our key highlights from the past year, including our financial, operational performance, as well as the progress that we've made with our strategic framework plans. Then I'll hand you over to Sunil Kumar, our Director of Finance and Corporate Affairs, and he will take you through some of the other financials. So just to start on financials, the year 2024 was a strong year for Al Mahhar Holding. We delivered solid growth with revenue increasing by 17% year-on-year, surpassing QAR 800 million. This reflects our continued focus with creating value in Qatar and taking advantage of all the opportunities it presents us in the energy sector. Our energy business remains the biggest part of our operations, making up 87.3% of the total revenue. This is a result of our continued and deliberate focus towards energy sector business, where we see the most potential for long-term sustainable growth. Our profitability also improved significantly. Net profit attributable to equity holders rose by 35% to about QAR 38 million -- I believe it's actually QAR 38.1 million -- whilst overall, the net profit grew by 64% from QAR 21.5 million to QAR 35.2 million. As a result, our net margin also improved from 3.1% to 4.4%. This strong performance was driven by a recovery from past losses in the infrastructure segment and the continued success of Petrotec in the energy sector, along with its portfolio companies. Sunil will go into more detail on those companies shortly after my presentation. Now, beyond financial growth, 2024 was also a year of operational progress. We made significant investments in IT and digital infrastructure, including the implementation of a brand-new ERP system and the launch of SAP for our HR functions, a lot of investment and upgrading of capabilities, which have enhanced our overall efficiency and ability to scale up. In 2024, we also saw strong demand for local manufactured goods, including explosion-proof devices, low-voltage and medium-voltage switchgear assemblies, reflecting our ability to support Qatar's industrial growth. Our focus on in-country value remained a key priority. Our participation in the Tawteen Local Content Conference in November 2024 also highlighted our ongoing commitment to supporting local suppliers and advancing Qatar's national economic goals. In addition, we played a vital role in major projects such as the North Field Expansion, Ras Laffan Petrochemical Complex and the [ Riviera ] offshore development, all of which are critical to Qatar's energy future. We also formed new partnerships in automation, instrumentation and digital system integration, strengthening our local capabilities and expanding the range of products and services that we can offer. We continued the development of our Ras Laffan flagship engineering service center, which now spans over 42,000 square meters. That's around 500,000 square feet. This facility strengthens our ability to provide specialized engineering services, including those enhanced services we just talked about in valve automation, controls and instrumentation, once again, reinforcing our role as a key player in the energy sector. Looking ahead, Al Mahhar has a clear strategy for long-term growth. Qatar's energy sector continues to present major opportunities such as the North Field expansion and Ras Laffan's petrochemical project, driving continued demand for engineered products and associated services. These projects will fuel further growth well into the next decade, providing a strong foundation for our 10-year economic plan, which focuses on expanding our service offerings, strengthening our market [ positioning ] and adopting new technologies to enhance efficiency. This will also include renewables and energy storage, as we see the future in this area going forward. Moving forward ourselves, this week is a particularly significant one for Al Mahhar Holding with 2 major milestones. Tomorrow, February 24, we will complete our transfer to the main market of the Qatar Stock Exchange. This is a big deal for us. This move reflects confidence in our strong financial standing, operational resilience and commitment to corporate governance. It will allow us to broaden our investor base, increase visibility and strengthen our own position in Qatar's capital markets. Then just 2 days later, on Wednesday, the 26th of February, we inaugurate our new electrical panels facility in [ Waqiah ]. This state-of-the-art electrical low-voltage switchgear facility marks an important expansion, once again supporting Qatar's industrial growth, and we are extremely proud of this. Our 10-year plan will guide our growth and build on momentum that [ we have ] already created, strengthening our leadership position in Qatar's energy sector. We remain true to our strategic framework that guides us as we build to create additional capabilities, build on service excellence and build on our true customer value. With that, I'd like to thank you all again for joining us and for your continued interest. I would like to take this opportunity, however, just to invite any of you to our inauguration on the 26th of February. Please contact us after this presentation if you wish to do so and attend. I will now hand over to my colleague, Sunil Kumar, who will take you through our financial performance in more detail.

Thank you, Enzo, and good afternoon, everyone. My name is Sunil Kumar, and I'm the Director of Finance and Corporate Affairs at Al Mahhar Holding, and I'm pleased to take you through our financial performance for the year ended 2024. We have uploaded our investor presentation on the website of Al Mahhar Holding for your reference, and I will not go through all the pages but a few relevant and important ones for this call. Page 5. As shown on Page 5, our -- we have achieved strong revenue growth, reaching QAR 800.4 million, up from QAR 683.2 million. This is a 17.2% increase, and it was mainly driven by the companies in energy sector, that is Petrotec, Team Services and Qatar Calibration, along with Q-FAB and Al Mahhar Kuwait from the infrastructure segment. It is worth noting that 61% of our revenue came from government-owned clients, reinforcing the strong partnerships we have built and our key role in Qatar energy sector. Now on Page 6, you will see that the gross profit increased to QAR 144.5 million, up from QAR 140.2 million in 2023. However, the gross profit margin decreased by 2.4%, and the breakdown of that decrease is 1.1% decline we had in the energy sector, and the balance came from the infrastructure sector. The decline in energy sector was mainly due to higher growth in product sales as compared to services. The remainder of the decrease in the infrastructure sector came when margin compression resulted from strategic efforts to reduce inventory through sales at lower-than-usual margins. We are also pleased to report a 35.2% increase in net profit to equity holders, reaching QAR 38.1 million compared to QAR 28.2 million last year. This translates to earnings per share of QAR 0.18 per share, up from QAR 0.14 in 2023. As Enzo mentioned, this increase in profitability was mainly due to the growth in energy sector, strong performance from our joint ventures and associates, and our shift away from infrastructure-focused operations. Looking at profitability, our net profit margin improved from 3.1% in 2023 to 4.4% in 2024. This was driven by better cost control and improved operational efficiency. On Page 10 of our investor presentation, you will see that our balance sheet remains solid. Total assets decreased by 2.7% from QAR 620.7 million to QAR 604 million. This was mainly due to our efforts to bring down the lower inventory -- our inventory levels as we reduced our exposure to infrastructure sector, along with a decline in cash and bank balances. At the same time, our total liabilities fell by 10% from QAR 279 million to QAR 251 million. This is mainly due to decrease in accounts payable and accruals and interest-bearing loans, which initially increased in 2024 in order to aid expansion of our operations. Our liquidity remains strong with current assets of QAR 429.4 million against current liabilities of QAR 181.3 million, resulting in a healthy liquid ratio of 1.8x and current ratio of over 2.3x. This reflects strong financial discipline and positions us well for future growth and investment opportunities. As we move forward, our focus remains on financial discipline and operational efficiency. With business growing and new opportunities emerging, we'll continue to closely manage costs, optimize our capital allocation and ensure a balanced approach to growth and profitability. Our goal is to sustain strong margins, while investing in areas that provide long-term value, all while maintaining a healthy cash position and a prudent approach to debt. Thank you for your time, and we'd be happy to take any questions.

Thank you, Sunil. I'd like to now open up the floor for participants on the call for any questions that may have. Please introduce yourself and the name of your company or institution that you represent, and Hamze and [ Dr. Ansi ] will also facilitate this. So please go ahead if there's any questions. Are there any questions at all from anybody, who'd like to put your hand up if you can't unmute? No questions? If there are no questions, as we wrap up today's call, I want to take a moment to thank you -- thank our shareholders, clients and business partners and the entire team of Al Mahhar Holding. And once again, we will continue [ on our ] growth and progress continues. Thank you very much.

Thank you.