Dhofar Food & Investment SAOG (DFIN) Earnings Call Transcript & Summary

[Foreign Language]

Good morning, everyone. Today, we are going to talk about H1 results of 2026. As you all know that H1 was an exceptional time of the year or, let's say, a period of time for all the companies in the region, and it was also exceptional for us because of the situation in the region. Having said that, the transformation journey that company started a couple of years back, ensured that our company survived, sailed and also thrived during these times of challenges, largely related to supply chain challenges, where our raw materials, our shipments to our markets in the region came under a lot of pressure and strain. Yet the teams did pretty well to deliver results, which were quite significantly better than what we had done last year. So at a stand-alone level, DFI delivered 21% growth in its revenue. At the group level, it was around 18%. So that's a very good double-digit growth in the times when things were not very smooth and as expected. Our operating profit, which, again, is an outcome of all the disciplines that we brought in, in the last couple of years as part of our transformation exercise; our stand-alone -- DFI stand-alone business delivered a 50% growth in the operating profit. At the group level, it was around 25%. And net profit also showed a significant jump versus last year. So that shows that all the corrections, all the changes that we did in terms of either at the process level or at the HR level or at our manufacturing level have ensured that even during these turbulent times, we were able to sail through and we have been able to manage our businesses, ensured that they kept on growing, they are still growing, and that's a very positive sign for a business to survive these challenging times. I think with that note, I'll request our CFO, Mr. Mazen Hassouna, to present the financials.

Good morning, gentlemen. I will share the financials right now. Okay. So good morning, everyone. I will briefly take you through the DFIs group half 1 2026 performance. Overall, as mentioned by Mr. Vipul, half 1 reflected a meaningful improvement in the group's financial performance with stronger revenue, profitability and EBITDA alongside an improved financial position. I will focus particularly on the performance of our continued operations and the progress made during the period. So starting with DFI stand-alone, revenue reached the amount of OMR 19.8 million compared with OMR 16.4 million compared to the same period of 2025. More importantly, the gross profit increased by almost OMR 2 million -- close -- by almost OMR 2 million, reaching OMR 5.2 million with gross margin improving to 26%. The operating profit was OMR 460,000, while net profit increased to approximately OMR 816,000 versus OMR 376,000 last year. EBITDA also showed an improvement of 2.6 -- increased to OMR 2.6 million, showing also an improvement year-to-year, whereas more or less, it remained at the same percentage to sales. So the key message over here is that the improvements are not only coming from the higher sales. We are seeing like improvements at the level of profitability and the operating efficiency at the stand-alone level. As far as the cash flow is concerned, the operating cash generation also improved year-on-year, although we continue to closely manage our working capital and the liquidity framework. As far as the financial position is concerned, the total assets remained stable at OMR 78 million. At the same time, the total liabilities, they reduced from OMR 33.7 million at year-end to OMR 30.3 million as of 30th of June 2026, while the equity -- while there also an improvement at the equity side. This is a very important point to mention, since it shows that the profitability is being accompanied by strengthening of the balance sheet and mainly the working capital level. We are also seeing -- therefore, we are also seeing a reduction in inventories and biological assets and a significant reduction in trade and other payables. Moving on to the DFI consolidated performance. Revenue reached at a consolidated level, the amount of OMR 58.9 million with an 18% increase above H1 2025. Gross profit also increased by 29% to OMR 10 million -- OMR 10.3 million, with gross margin improving from 16% to 17%. Operating profit also increased to OMR 2.8 million from OMR 2.2 million for the same period of last year. Most importantly, over here, the profit from the continuing operations increased by 45%. Last year, we had the effect of the discontinued operations, which were sold off to our shareholder [ Dede ]. So -- and this is one of the main reasons why we're presenting the discontinued operations as a separate line items. As far as the consolidated financial position is concerned, the cash increased from OMR 1.8 million at year to OMR 3.4 million. Total liabilities reduced from OMR 48 million to OMR 43.9 million, alongside with the improvement in the equity. This gives the group a stronger financial platform and greater flexibility going forward. At the same time, working capital remains an area of focus over here, particularly the inventory management. And we are -- we continue to focus on converting this such improvements into earnings and into sustainable cash generation. Lastly, as far as the shares are concerned, we have seen a significant increase in the market price of DFI shares that's going from OMR [ 0.000083 ] as of year-end, reaching OMR [ 0.000207 ] as of 30 June 2026. The earnings per share also, there is an improvement for DFI going from OMR 0.001 to OMR 0.012. And the net asset per share has also improved from OMR 0.216 to OMR 0.242. To conclude, the -- again, the half 1 2026 represents another important step in the DFI's financial improvement. There is -- there has been a delivery of strong revenue, of improved margins, of higher profitability and EBITDA and also stronger liquidity, which is getting better and better by the time and by -- on a month-on-month basis. Our focus is -- for the remainder of the year is to continue building this momentum while continuing -- while maintaining the financial discipline, improving the working capital efficiency and ensuring that improvement in earnings is sustainable. Thank you so much. We would be very happy taking your questions.

[Operator Instructions] [Foreign Language] Thank you, Mr. Vipul and Mazen.

Thank you, everyone.

Thank you, everyone.