Baladna Q.P.S.C. (BLDN) Earnings Call Transcript & Summary

Hello, everyone, and welcome to Baladna conference call. Please note that this call is being recorded. I'd now like to hand over to our moderator for today, Bobby Sarkar. You may now begin.

Thank you, Eli. Hi, hello, everyone. This is Bobby Sarkar, Head of Research at QNB Financial Services. I wanted to welcome everyone to Baladna's Fourth Quarter and Year-end 2024 Results Conference Call. So on this call, we have Saifullah Khan, who is the CFO at Baladna, and we will conduct this conference with management first reviewing the company's results followed by Q&A. I would now like to turn the call over to Saif. Saif, please go ahead.

Thank you, Bobby. Good afternoon, ladies and gentlemen, and welcome to Baladna Year-end 2024 Conference Call. My name is Saifullah Khan. I'm the CFO of Baladna. Thank you for taking time to join us today. The presentation materials have been shared in advance and are also available on our website. I will keep my remarks brief to allow more time for question and answer at a later stage. Before we begin, let me give you a brief introduction to Baladna. As country leading dairy and beverage company, Baladna is proud to be recognized as trusted brand for milk, dairy, juice and food products. Since our establishment in 2014, we have built a strong foundation with 2 large-scale farms, state-of-the-art production and packaging facility and -- which helps country to make self-sufficiency and support the future growth of the business. Our vision is to be a most trusted provider of nutritious food and healthy beverages in Qatar while expanding into the new markets. Now I would like to turn to our financial results and performance for the full year ending December 31, 2024. I'm pleased to report that Baladna achieved record results in 2024, demonstrating our continued commitment to growth and operational excellence. Full year revenue reached a record QAR 1.15 billion, representing an 8% increase compared to previous year. This growth was primarily driven by higher sales volume across HORECA and retail channels, capitalizing on favorable market conditions and increased market share in key product categories. And our EBITDA for the full year grew by 17% year-on-year basis, reaching a record QAR 381 million, with an EBITDA margin of 33%, which is a 2.6% improvement over last year. The margin expansion was driven by cost efficiency across the entire value chain and placed Baladna at the higher end of regional peers. Net profit for the year reached a record QAR 185 million, reflecting a remarkable 69% year-on-year increase. This was mainly due to our strong revenue growth, along with reduced finance costs and an increase in profit from international activities. Overall, our continued focus on cost management and operational efficiency has yielded strong results, with net profit margin improving from 10% to 16% compared to the previous year. Earnings per share increased by 69%, reflecting our strong ability to convert growth into value of -- for our shareholders. Moving on to quarter 4 performance. Revenue for the quarter reached QAR 286 million, marking 1% year-on-year increase. This growth was primarily driven by increase in sales volume, coupled with market share gain in key product categories. EBITDA grew 1%, in line with revenue growth. EBITDA margin remained stable at 33%, highlighting effective cost management. Net profit recorded in quarter 4 2024 and amounting to QAR 44 million has marginally decreased compared to quarter 4 of 2023 due to the slight increase in finance costs in quarter 4 2024. In terms of cash flow, Baladna emphasized its cash flow-generating abilities and implemented stringent control over capital expenditures, supported by rigorous investment analysis and business viability assessment. As a result, we successfully optimized our capital expenditure and investment, reducing them by QAR 84 million by over a year. This led to a significant increase in free cash flow, reaching QAR 251 million, a remarkable improvement of QAR 173 million compared to 2023. On the consumer strategy front, we entered the right high-protein milk. Further, we launched new Greek yogurt flavors, broadening our cheese range and enhanced juice range with revamped packaging. Finally, we revitalized the Awafi line, which play a key role in offering choice and value to our consumer in plain dairy segment. In total, we have added 39 new SKU this year. This innovation in products contribute significantly to our top line performance and further strengthening Baladna leadership in the dairy and the juice segment, reinforcing our commitment to quality and market demand. Our domestic market growth was further supported by securing a substantial government contract to supply evaporated milk in 2025, valued at approximately QAR 100 million. This product will be manufactured in our new state-of-the-art facility, aligning with the Qatar food self-sufficiency goals. A major strategic highlight was finalizing the joint venture with Algerian National Investment Fund to establish the world largest vertically integrated dairy farms. The key milestone achieved, including signing the framework and the shareholder agreement, transferring initial capital and incorporating Baladna Algeria. We are currently finalizing key agreements, which will further solidify our presence in Algeria. Additionally, we signed MOU with the Algerian Ministry to explore an infant milk production project, which will complement our new integrated dairy ventures and further strengthen our regional footprint. Let's now review our operational and commercial performance. We achieved balanced and robust growth across key channel, showcasing the strength of Baladna diversified approach. As the [ #1 ] food manufacturing and distribution company in Qatar, we continue to provide unmatched services to both retail and HORECA channels. HORECA demonstrated strong 8% year-on-year revenue growth, driven by sustained demand from hotels, restaurants and cafe with favorable market conditions in Qatar. In the retail key account segment, we saw 5% revenue growth, supported by a strategic partnership with the large-scale retailers where the traditional trade channels revenue also grew by 8%, reflecting steady consumer demand at local outlets. Initiatives such as targeted marketing, marketing campaigns made a substantial contribution to market share growth in key categories. By the year-end, our overall market share was 54.1% compared to 53.5% at the end of 2023, and we held a 62.7% share of Qatar dairy segment compared to 61.7% in the prior year. We are also proud to have become the first company in Qatar to receive FSSC 22000 version 6 certification for food safety management system, reinforcing our commitment to quality and reliability. At the last, looking ahead, our strategy remains focused on growing the key product category and expanding our share in high potential segments. We will continue to innovate new products to meet evolving consumer needs, leveraging best-in-class technology such as introducing robust improved milk consistency to support both operational excellence and long-term sustainable growth. We are building on the momentum in Algeria, where our strategic initiatives are set to drive shareholder value and enhance our global presence. The upcoming infant milk production project further strengthen our portfolio and regional footprint. Financially, we will maintain our focus on cost control, operational efficiency and expanding our channel and product categories to sustain top line growth into the next quarter and beyond. In conclusion, Baladna is well positioned to continue developing -- delivering strong performance as we start a new financial year. Our focus on innovation, operational excellence, strategic initiatives will keep driving our momentum. Thank you. And with that, I will open the floor for questions and answers.

[Operator Instructions] As of right now, we don't have any raised hands. I'd now like to hand over to Bobby.

Okay. So if we don't have any questions, we can end the call for today. I want to thank Saif for taking the time for going over the presentation, and good luck, and we will again do this next quarter. Thank you very much.

Thank you, everyone.

Thank you, everyone, for attending today's conference call. Have a wonderful day.