Al Meera Consumer Goods Company Q.P.S.C. (MERS) Earnings Call Transcript & Summary

Hello, everyone, and welcome to Al Meera conference call. Please note that this call is being recorded. I'd now like to hand over to our moderator for today, Roy Thomas, you may now begin.

Thanks, Eli. Hello, everyone. This is Roy Thomas from QNB Financial Services. I want to welcome everyone to Al Meera Consumer Goods Company's Third Quarter and 9 Months 2024 Financial Results Conference Call. On this call from Al Meera Consumer Goods Company, we have Razan Rauff, the Finance Director; Indranil Goswami, the Organization and Business Development Director; Quennie Gania Trajano, the Manager for Budgeting and Reporting and IRO; and Jaylene Vibar, the Finance Manager. We will conduct this conference call with management first reviewing the company's results, followed by Q&A. I will turn the call now over to Quennie Gania Trajano. Go ahead, Quennie.

Thank you, Roy. Hello, everyone. Welcome to Al Meera's conference call for third quarter of 2024. We will be starting off with an overview of Al Meera's results for the period ended September 30, 2024, to be followed by updates on Al Meera's projects. Then we will proceed to questions and answers. The following are the financial highlights of the group for the 9-month period ended September 30, 2024. Al Meera recorded consolidated sales of QAR 2.1 billion, an increase of 0.3% compared to the same period in 2023. Gross profit amounted to QAR 391.9 million, an increase of 1.5% compared to the same period in 2023. Gross profit margin was at 18.5%. Rental income is at QAR 59.6 million compared to QAR $64.6 million for the same period in 2023. Other income is at QAR 37.8 million, an increase of QAR 14 million compared to QAR 23.8 million for the same period in 2023. Operating expenditures increased by 5.4% to QAR 265.1 million compared to the same period in 2023. Overall, Al Meera reported a net profit of QAR 119.2 million and earnings per share of QAR 0.58 for the 9-month period ended September 30, 2024. I will now give you an update on the group's operations. Al Meera's retail store expansion plans are progressing as planned and are expected to be operational in 2025. Our corporate and e-commerce sales segments are also being expanded based on market demand. I will now open the floor to question and answers.

[Operator Instructions] Our first question comes from Rose [indiscernible] from NBK Wealth.

Am I audible?

Yes, we can hear you.

Okay. So I have 3 questions. Would you like me to ask them all together or one by one?

You can ask one by one.

Okay. So my first question is, along with your store expansions in Qatar, your sales per store is declining, which is impacting your profitability. Can you elaborate on the reason and what is your strategy to improve the store's performance?

Can you repeat the question, please?

Of course. So along with the stores expansions in Qatar, the sales per store has been declining, which is impacting the profitability negatively. Can you elaborate on the reason? And what is your strategy to improve the store's performance?

In terms of sales per store, yes, it has declined because you need to look at the competition also. So the population has been flat over the last few years. And I'll just give you a small example. Lulu has expanded from 9 to 24 stores over the last 3 years. Similarly, Monoprix has added quite a few stores to them. The smaller brands like Saudi and Rabi, they have expanded aggressively. So -- and the population has remained constant. So this is something which is a reality for this segment. So I think everyone will be impacted because the size of the pie is the same and the slices are getting smaller.

Clear. My second question is, your performance in Oman has been weak. What are you doing to improve the performance? And given this weak performance, what are you planning to -- why are you planning to expand further in the market by partnering up with Shell?

Oman, we are actively pursuing that business. So last year, we closed down 2 unprofitable businesses. So if you look at the retail operations, we have been profitable. So Oman retail operations are profitable at a net profit level. So we actively manage that business. And last year, as I told you, we've exited 2 loss-making stores. So all the stores are in profit making this year.

But relatively, it has been weak.

Pardon?

Relatively, for example, if you compare with peers such as Lulu, the performance of operations in Oman are weaker?

It is. It is because Oman also has seen an influx of quite a new retailer. So there's someone called Viva, who is a discount retailer who entered last year. There were some who expanded stores in Oman also the story is the same. And Oman also has been hit by some economic recession because the GDP is not being there. So yes, Oman, there is some amount of weakness, but we are profitable at the store level. So that's something which is very comforting for us. And for Shell, yes, that's another initiative which we have taken. So Shell has a network of 56 stores there in Oman. So we've tied up with Shell to -- we will be basically managing these stores. So that revenue would be an additional revenue, which will come to our books. So that's another initiative which we have taken this year to grow our business. And so far, we are -- I think for till yesterday, what I know is 46 stores are live out of the 56%.

Clear. So my last question is, what is your current occupancy rate in terms of the leasing segment? And how do you see the performance of the leasing segment going forward? Is the lease per SQM increasing? Or are you able to increase that? Or is it flat?

I mean from occupancy rate, we are almost close to 100%. The drop in lease income that you see is because we had to close down some of the lease premises for the renovations that we are currently having. Mansoura is going through a big renovation where we lost rental income. Similarly, I mean, there are a couple of other renovations that we are doing where some of the lease income has been reduced or at least been forfeited for the renovations to get completed. So we expect the lease income to go back to normalcy levels in probably Q2 2025. And from there, it will be stabilized. So from occupancy, we are almost close to 100%.

[Operator Instructions] There are no further questions as of this moment. I'd now like to hand back over to Roy Thomas for further remarks.

There are no further questions. We would like to thank Al Meera Consumer Goods Company's management for the results update and answering the queries. And we look forward to speaking to you all for the final quarter results. Thank you.

Okay. Thank you very much.

Thank you for attending today's call. You may now disconnect. Have a wonderful day.