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

[ Foreign Language ] Good afternoon, ladies and gentlemen. My name is Hamza, and I will be your host for today's investor conference call to discuss Al Mahhar Holding H1 financial results for 2026. Thank you all for joining us. Let me introduce our speakers for today's call, Enzo Dellesite, our Group CEO; and Girish Puranik, General Manager of Finance. In 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, Enzo will present the H1 financial results for 2026.

Thank you. Good afternoon, ladies and gentlemen, and a very warm welcome to everybody joining us today for the Al Mahhar Holding earnings call. Thank you for joining us. My name is Enzo Dellesite, and I am the CEO of Al Mahhar Holding. Now over the next few minutes, I'll take you through our key highlights for the first half of 2026, including our financial results, operational progress, and updates on our strategic road map. Then I'll hand you over to Girish Puranik, our General Manager of Finance, who will take you through our financial details. And as always, you can refer to the full investor presentation, which is now available on www.almahharholding.com. I'd like to start by a heartfelt thanks to the entire Al Mahhar Holding team for demonstrating an exceptional attitude to problem-solving and collaboration during an incredibly difficult period here in the Middle East. In our presentations, we will discuss the financial results. Those results attributable to an immense effort and outstanding collaboration between our international partners, our customers, and our local teams. From rerouting equipment through new land bridges to delivering critical offshore and upstream services, entirely supported by our own local expertise -- everybody played their part and supported our customers when they most needed us. Thank you. Now to the financials. The first half of 2026 demonstrated Al Mahhar's resilience and financial discipline in a significantly challenging regional environment. These headwinds stemming from the regional tensions and blocked sea routes, which carried and created operational disruptions, including logistics and logistics cost impacts and affected the pace of certain commercial activities. Despite these headwinds, our business has delivered improved profitability. Revenue from the period stood at QAR 487 million compared to QAR 500 million in the same period last year. Whilst revenue was flat to plan and below prior year, I'm encouraged by the underlying quality of our earnings and the trajectory of our higher-margin divisions. Equipment rental income grew by 11.6% year-on-year. Our combined service and revenues represented the greatest portion of the total revenue than prior year, reflecting the deliberate shift we have been making in our revenue mix. Importantly, net profit to equity holders grew by 4.5% to QAR 27.3 million, whilst overall net profit increased by 8.1% to QAR 28.8 million. This was achieved through a combination of disciplined cost management, significantly lower G&A expenses, a favorable revenue mix and growing contributions from our associate companies. Our net profit margin improved to 5.92% compared to 5.3% on the prior year, which speaks to the progress we are making on the efficiency agenda. 5.9% represents the highest net margins we've achieved as a group since transitioning to the Qatar Stock Exchange, a fantastic result. Looking ahead, we remain focused on delivering profitable growth, maintaining financial discipline, and deepening our positioning across Qatar's energy and infrastructure sectors. With that, I'd like to thank you all again for joining us and for your continued interest. I will now hand over to Girish Puranik, who will take you through the financials in more detail. Over to you.

Thank you, Enzo, and good afternoon, everyone. I'm Girish Puranik, the General Manager of Finance at Al Mahhar Holding. And I'm pleased to take you through our financial performance for the first half of 2026. As shown on Page 5 of the investor presentation, revenue was QAR 486.97 million compared to QAR 499.99 million in the same period last year. Within this, equipment rental income grew by 11.6% year-on-year and the combined contribution of service and rental income as a proportion of total revenue increased to 18% in H1 2026, supporting a more resilient and margin accretive revenue base. As we move to Page 6, you will see that despite a slight decline in revenue, gross profit remained broadly stable at QAR 84.1 million. As a result, gross margin improved further to 17.3% compared to 17% in the prior year period. We are also pleased to report a 4.5% increase in net profit attributable to equity holders, reaching QAR 27.3 million compared to QAR 26.2 million in the same period last year. This translates into earnings per share of QAR 0.13, consistent with QAR 0.13 in the prior year period. The increase in profitability was primarily driven by a significantly lower general and administrative expenses and reduced finance costs. Overall, our net profit margin improved to 5.9% in the first half of 2026 compared to 5.3% in the first half of 2025. As Enzo mentioned, this represents the strong percentage net margin we have achieved as Al Mahhar Holding. On Page 10 of the investor presentation, you will see that our balance sheet remains solid. Between 31st December 2025 and 30th June 2026, total assets rose by 4.6% from QAR 651.9 million to QAR 681.8 million. This increase was driven largely by noncurrent assets, which grew by 8.7% to QAR 208.9 million, reflecting growth in right-of-use assets and our investments in associate companies. Within current assets, trade receivables and prepayments increased by 13.4% to QAR 266.3 million, while cash and bank balances remained broadly stable at QAR 103.6 million. At the same time, total liabilities increased from QAR 280 million as of 31st December 2025 to QAR 307 million as of 30th June 2026. This was mainly due to an increase in trade payables and other liabilities, which rose to QAR 232.1 million from QAR 204.4 million, further demonstrating our strong and favorable supplier and vendor arrangements. Interest-bearing loans and borrowings continue to decline, reflecting the group's ongoing deleveraging. Our liquid remains strong with current assets of QAR 472.9 million and current liabilities of QAR 244 million, resulting in a quick ratio of over 1.5x and a current ratio of over 1.9x, reflecting the company's financial discipline and flexibility. Total equity grew to QAR 374.8 million after dividends of QAR 31.1 million paid to shareholders during the period. Looking ahead, we intend to continue managing costs, allocating capital with the discipline and balancing growth with profitability. We also aim to sustain strong margins while investing in areas that support long-term value alongside maintaining a healthy cash position and a prudent approach to debt. Thank you for your time, and we would be happy to take any questions.

Thank you, Girish. I'd like to open the floor for questions. If you have any questions, please go ahead, and we'll be happy to answer those. If there's any other questions from the teams or Hamza?

Actually, we have received 2 questions from our Investor Relations teams earlier. First question is, what confidence do you have with continuing to meet your targets?

Okay. I'll take that. Okay. At the moment, we are confident of our Q3 performance because we have a significant amount of that in our backlog. So we have an anticipation of approximately QAR 247 million for Q3, and we currently have about 90% of our backlog secured with a short period for us to book and ship in that period to meet our Q3 targets. Looking forward to Q4, it's a much more difficult subject because there's a huge amount of uncertainty in the market because of the Strait of Hormuz in particular. But we are focused on our present backlog. And with the outlook, and the bookings that we're achieving, I'm very confident that we can go forward and meet our targets for the year. However, substantial headwinds in the way with the geopolitical situation. I will say that in July alone, we secured one of the most successful July booking months that we've ever had. We booked over QAR 120 million of business, some significant project orders right across the board. So we're confident that our current run rate of orders will take us to where we want to go. So thank you very much.

Thank you. Thank you, Enzo. The second question is, how robust is your supply chain to manage execution of projects? What have been your biggest challenges?

On the execution side -- and the challenges, I think they're both related because we have had to change in our speech, we spoke about changing land bridges, building new routes using new ports that we've never used before, King Abdullah Port, Jeddah, Yanbu for transiting goods. For a particular project for an offshore shutdown, we combined a port in India -- we combined a port in India. We also used the port of Fujairah, and we also managed to land crews across to Jebel Ali and use a boat to bring equipment into Qatar's Hamad Port. So there's an incredible amount of effort gone into creating new supply chains so that we can deliver to our customers.

Thank you, Enzo. We have also received another question from Nikhil. Given the current geopolitical situation, it looks like LNG projects associated with NFE has been delayed. How is that affecting the company?

Okay. Thank you. First of all, we rely on projects to bring equipment into Qatar, but our primary growth is the downstream capabilities that we create. So if equipment is coming, we are able to commission, pre-commission the equipment and provide life cycle services and spare parts for that business. So we're not reliant on projects per se. We're relying on the other side of it on the maintenance and the execution of services. So it doesn't affect us too badly. As of now, the NFE project is split into 4 different projects. And the one that is most delayed is the McDermott portion, which is the NFX. So other than that, Saipem, who we are doing a lot of work with are ongoing with their project, and we are not seeing any significant impact at the moment.

Another question also, what was the loss on subsidiary that the company booked during Q2 2026?