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 the call over to Phibion. Phibion, you may now begin.

Thank you, Eli. Good afternoon to you all, and thank you for joining us for today's Al Meera Consumer Goods Company Conference Call for 1Q 2025. My name is Phibion. I'm with QNB Financial Services. And now let me present the Al Meera management team for today's call as follows: Razan Rauff, the Finance Director; Indranil Goswami, Organization and Business Development Director; Quennie Trajano, Manager, Budgeting and Reporting and IR Officer; and Jaylene Vibar, the Finance Manager. And as usual, they'll go over the performance first, and then we'll have a Q&A session immediately. Let me now turn over the call to Quennie to begin. Please go ahead, Ma'am.

Thank you, Phibion. Hello, everyone. Welcome to Al Meera's conference call for Q1 2025. We will be starting off with the overview of Al Meera's financial results 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 3-month period ended 31st March 2025. Al Meera recorded consolidated sales of QAR 789.4 million, a decrease of 0.4% compared to the same period in 2024. Gross profit amounted to QAR 156.7 million, an increase of 10.4% compared to 2024. Rental income is at QAR 19 million compared to QAR 20.3 million for the same period in 2024. Other income is at QAR 9.2 million compared to QAR 23.8 million for the same period in 2024. Operating expenses decreased by 7.7% to QAR 94.8 million compared to QAR 102.7 million for the same period in 2024. Overall, Al Meera reported a net profit of QAR 53.2 million and earnings per share is at QAR 0.26 for the 3-month period ended 31st March 2025. I will now give you an update on the group's operations. Al Meera's retail store expansion plans in Qatar and Oman 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 answer.

[Operator Instructions] Your first question comes from Wei Chow of Al Rayan.

This is Zohaib Pervez from Al Rayan Investment. I've got 2 questions. Firstly, could you let us know your like-for-like sales for the first quarter of 2024 -- 2025, sorry, the one that's passed? My second question is on the provision for employee end of service. So again I'm looking at your cash flows and they have come down versus last year. I mean, last year, they were nearly 5 million. This year, they're about 2 million. So what changed that this end of service has come down so much?

Okay. On the first question, the like-for-like sales, our like-for-like sales for Q1 is down on average 2% to 3%. And as for the provision for end of service benefits, there were certain -- so as for the provision for end of service benefits, there were certain reduction in our staff costs.

So Pervez, there were certain reductions in the staff costs that we took in the year. And basically, I mean, that's also reflected in the overall G&A expense coming down, right? So that's something that we have been able to manage to ensure that we maintain the provision.

This staff reduction is lower number of staff or adjustment of benefits?

No, no, there's no adjustment of the benefit. It's basically the lower number of staff because of certain retrenchments that happened.

[Operator Instructions] Your next question comes from the line of Wei Chow of Al Rayan.

My question -- this is [indiscernible] from Al Rayan Investment. My question is, you mentioned expansion at the beginning. Could you please expand on that kindly?

Expansion, I mean, over the past, I would say, 1.5 to 2 years, we have been, I mean, renovating certain stores, and we are also opening up a couple of stores like. So in Q1 this year, we opened the renovated or the new Mansoura because we moved the location on the same premises, but we built something completely new because the old building was pretty old and it was falling apart. So basically, that's one of the expansions that we had. We also opened a new branch in Thuamama. Again, that's a completely new branch that we have done. In addition to that, we have also renovated about 5 to 6 stores, which are complete renovation. It's not just small facelift. It's a complete facelift where the company has invested a lot of money on getting these branches renovated. So strategy of Al Meera has been that we will go into areas selectively every year. So we normally look at on average 2 to 3 branches to be opened or renovated on a yearly basis. So this has been a strategy over the past, I should say, 10 years, and we will hopefully continue it in the future.

And do you have any guidance for the full year?

Again, I mean, just to update everybody, I mean, we had the AGM on the 14th of April this year. And as you might be aware, there has been change at the Board level from the Chairman, Vice Chairman to some of the Board members getting reelected. So again, we are currently in discussion with the Board to understand the expectations and their plans and so on and so forth. So we need a bit more time to give a further update on the direction at a Board level as to how they want to move forward the company. But effectively, I mean, what we have seen over the past several, what I can say, I mean, board changes that happened that the overall philosophy and the growth path has not changed, but there may be a little bit of tweaks here and there depending on different board viewpoints.

The next question comes from the line of [indiscernible].

Can you guys shed some light about the footfall in your supermarkets and how it develops over the last year and this quarter?

Can you repeat the question, please?

My question is about the footfall. I mean, the number of visitors. So how do you guys see the development in your footfall in your supermarkets compared to same quarter last year and over the last year, how was the footfall?

Okay. So the footfall hasn't seen any drastic changes from last year Q1 to this year Q1. So we have been having more like a stable footfall. And that -- I mean, our footfall is directly related to the population of the country. And we don't -- we haven't seen any major shift in the population. So basically, our footfall hasn't either decreased or increased. So we have remained flat on the footfall from Q1 last year to Q1 this year.

And regarding the expansion, you don't guys fear any cannibalization from the new expansion to affect the existing stores?

Again, it's -- the CASA market from what it was, let's say, 10 years ago to now is very competitive. I mean we have got several new players that have come in and so on. So basically, the size of the pie has remained the same. So there is some amount of -- I mean, not cannibalization, but everybody is eating into the same size of the cake. So Al Meera to stay ahead, we need to, I mean, get the stores because some of our stores in a very depleted state. That's why we have reinvested back again to give back to the stores so that we can attract the customers. Now all the renovations that goes through, during the renovation period, yes, we did not close the store, but effectively, some customers moved away because of construction and so on and so forth. Now generally, what we have noticed is it takes about 6 to 9 months for these customers to come back to Al Meera. So we expect the gradual, I mean, increase in footfall in these stores, right, that will overall help us on the revenue side. Again, cannibalization-wise, I mean, there's always going to be cannibalization if I open a store next to an existing Al Meera or if I open next to, let's say, a Lulu or Monoprix or Carrefour, right, there's going to be some amount of customers that's going to come to Al Meera and vice versa. So this is how the market is. And we are trying to manage that we don't cannibalize ourselves and we try to grab other competent market share.

Okay. And regarding the competition, how do you guys see the competition in terms of impacting your margin, number one, and overall growth in revenues?

The margin, I mean, again, it all depends on the promotion strategy that we write across the stores. The market itself, I mean, generally, there are seasonal, what you call, promotions that happens across all these stores. For example, Ramadan, again, is a peak month for all retailers, I mean, grocery retailers. And what happens is they try to run a lot of concurrent campaigns across everything. And effectively, we try to run these campaigns so that it doesn't affect our margin. And also, we try to negotiate better with our suppliers so that we -- our margin doesn't get impacted. I forgot your second question on...

Yes, on revenue growth.

On the...

Revenue growth.

Revenue growth. Again, revenue growth, again, what we are seeing is, I mean, we have 5 new -- 5 renovated branches, and we've got about 2 new branches that came in big way and also, [ Al Karaana ] which has opened last year. So all of these branches takes about 6 to 9 months for us to get back to, let's say, the potential sales of those locations, right? So currently, we are going through the first couple of months. So we expect by Q3 -- or Q3 to Q4 to ensure this is the -- I mean, the potential that these locations have. So revenue will be on a slightly upward side on these locations.

Yes. But I would assume that for your brand expansion, you guys are targeting some kind of revenue growth. For this brand expansion, can you just tell me that whether it will be leased or it will be owned like most of your stores?

Most of these are owned by Al Meera, right? So the properties that has gone through renovations and what we have built is all our own properties.

For the new expansion, for the expansion that you guys talked about, this will be owned or leased?

It will be a mix based on the location because most of the lease premises that have come our way, I mean, it depends on the location and whether it's viable for us to open up because Al Meera has a certain criteria on which we look at the location. And if it fits those criteria, yes, we might go with the leasehold. If it doesn't fit and we might be having a property, then we will go with the building on our own.

As of right now, we don't have any questions. I'd now like to hand back over to Phibion for final remarks.

Thank you, Eli. It's Phibion again. If there are no questions on the line, I think we can bring the call to an end. Thank you all for joining us this afternoon. Thanks to the Al Meera management team for taking the time to update the market. And please do join us for the 2Q 2025 call. Have a good day.

Okay. Thank you.

Thank you for attending today's call. You may now disconnect. Goodbye.