Dhofar Food & Investment SAOG (DFIN) Q2 FY2025 Earnings Call Transcript & Summary

[Foreign Language] Please, Mr. Vipul, go ahead.

Thank you, Mr. [ Subir ]. Good morning, everyone. Today, we are going to process the first half year of 2025 results. Before we present the results, I'll just give you a brief background in terms of what has been happening in the last few quarters. In the last presentation that we did for MSX when we presented our 2024 results, that was a few months back, we mentioned that we are -- the group is going through a transformation in terms of its businesses, processes, people, new projects, so on and so forth. I think today, we are pleased to process the results that my colleague, Mazen, is going to display shortly, that all those steps and initiatives that we took in the last few months and quarters, they have started to yield results. So end of H1, our revenue is growing by 28%, delivering a positive bottom line. So we are in green as compared to first half of last year. So that shows and proves that we are on the right track. Having said that, we are still not out of the woods. We're still trying to ensure that all the projects or all the challenges that we started encountering in the last few quarters and the steps that we have taken, we are on -- they are under progress. And I'm sure and confident that in the coming months and quarters, you will see further improved results. With that, I will request my colleague, Mazen, who is our CFO, to present the detailed results for the group and for the parent company. Thank you.

Thank you so much, Vipul. Thank you so much, Abdullah. Thank you so much, gentlemen, for your patience. I will hereby share my screen. So we are going to go through the performance of DFI as a stand-alone and consolidated for -- consolidation for the group for the first half of 2025. Further, to what Mr. Vipul has discussed, DFI as a stand-alone for the first half, it realized a profit of OMR 417,000, a gross profit, which was standing at almost 23%, not so far away from whatever we -- was budgeted at 24%. And still, further improvements are happening in order to increase this gross margin. Many improvement happened on segment-wise, also regarding the dairy segment and the feed mill segment. And we expect that these results will continue from now until the end of the year. So we closed half 1 with a net sales of OMR 19.5 million with an operating profit of OMR 572,000, making 3% almost of net sales and a profit of OMR 417,000, making a net profit margin of 2.1%. EBITDA of the company as a stand-alone standing right now -- stood as of 30th of June at 12.2%, amounting to almost OMR 2.4 million. As far as the balance sheet -- stand-alone balance sheet is concerned, we see that there is a very good improvement in the liability side, which reduced from OMR 12.1 million to OMR 8.8 million. Inventories and biological assets also have reduced from OMR 10 million to OMR 7 million. This is coming mainly from the improvement in the overall working capital cycle and inventory management, and the cash balances are almost the same. As far as DFI consolidated performance are concerned, this is including the dairy business, including the vegetable oil business and the poultry business and our small business of packaging. Total sales for half 1 realized almost OMR 52.6 million compared to a budget OMR 53.5 billion. Of course, there is an increase compared to H1 2024 by almost OMR 12 million or OMR 11.5 million. Gross profit margin increased compared to H1 2024 from 14.7%, amounting to OMR 6 million; to 15.4%, amounting to OMR 8 million. Total expenses also have been -- group-wise have been reduced as far as the comparison to sales is concerned from 6.9% to 12.4%. In terms of amount last year, we operated at OMR 6.9 million compared to H1 2025, OMR 6.5 million. So there's a very big improvement at consolidated level. And also, as far as the profit is concerned, net profit before taxes is OMR 511,000 compared to a loss of almost OMR 1.6 million for the same period of last year. Net profit after tax is at OMR 332,000 compared to a budget net profit of 2025 half 1, OMR 368,000 only a couple of like around OMR 30,000 difference. But compared to a loss -- a net loss in H1 2024 of almost OMR 1.6 million, OMR 1.558 million in 2024, as we discussed. So basically, also, this overall improvement have reflected also in the consolidated balance sheet, especially, as I said before, in terms of working capital management, in terms of reduction of -- in liabilities, which is leading us to better cash flows as we will see at a consolidated level the -- as far as net cash from operating activities, consolidated level increased from a negative OMR 14 million to a positive OMR 8.2 million for the first half of 2025. Net change in cash effect that was also positive, almost OMR 79,000 compared to net usage in for the half 1 2024 of OMR 1.6 million. And so far, these are the consolidated results. If anyone has any questions, we would be very happy to answer.

We appreciate all the effort for the transformation. Now I think I was just checking the records. The last dividends was -- given by company was in 2016, which is almost 10 years back. So what's the plan in terms of giving the investors and the shareholders something after all these years? We've been patient for a long time. And so what's the plan of the management in terms of rewarding the shareholders? So this is one.

Yes. Mr. Ali, over here -- I'm sorry, the line got interrupted at the beginning of your question. So I -- from what I understood, you are talking about or you are addressing the -- any chance for any dividends. Is that right?

Yes, sorry, I don't know why the line was not clear. Yes, definitely. So I was just referring to the last dividend was given by the company back in 2016. So it's almost 10 years now. [indiscernible] we see great performance and great turnover, also transformation, especially after the acquisition of the vegetable oil business as well, okay? So -- also, the margins are better or the prices half increased and all of that. So I don't know what's the plan now in terms of compensating the shareholders after all these long years.

First of all...

You have a healthy value. You have your book of value is around 200 baisa. Unfortunately, the share price is really low compared to the book value you guys have. So we need to see something happening in terms of compensating the shareholders and also seeing some movement in the share price, yes? So what are you guys doing to address it all?

So first of all, thank you very much. We would like to thank the shareholders for their patience for all these years. This is something to mention. And as far as DFI is concerned and as also was addressed by the CEO, we are still right now in the middle of the transformation. Unfortunately, across the years, as you can see from the balance sheet or from the previous balance sheets, there have been certain accumulations of matters that management is currently addressing in terms of investments and working capital. To answer the question directly, as we are speaking right now, we do not have -- the company does not have any plans for dividend distribution, given the fact that we are still in the middle of the transformation and there are still some segments that we are working on in order to improve their profitability and also their cash flows. We might be in a better position by the end of the year in order to assess the situation, along with the Board of Directors. And if practically, this matter continued -- these improvements shall continue to be the same, then the matter would be aligned with the Board of Directors to see whether there could be anything that could be done in this regard. But honestly speaking, right now, we do not have any plans as such. So we appreciate also, again, your patience, maybe as we have always appreciated it in this regard.

Yes. Thanks for your feedback. However, we need to see some road map, yes? [Foreign Language]. We should see there is a road map of transformation, improved performance, improved profitability higher revenues. [Foreign Language], you guys are working in a very positive and constructive way. We also need to see similar effort to compensate the shareholders and to support the share price as well in the market as well. We're not happy to see the share price really below the book value. And the company is a great company, oil company. We keep on buying the products of the company to support -- there's a lot of products in the market. However, we insist to buy the local products to support the company. So -- but at the same time, we want you to focus on the as well, all the guys are doing.

Inshallah, it's going to be a main area of focus given the fact that it is also our job to maintain the interest and to safeguard the interest of the shareholders and to ensure that their investments is having the appropriate return. So inshallah, the coming period or periods, this matter will be taken care of along with the transformation that will continue to happen.

Maybe also -- maybe you can consider also some other business lines. I think breeding animal stock is also getting momentum also in Oman. There are a lot of opportunities being kind of introducing to the market. So you guys also need to look for something also as new business lines to support the company, whether it's vertical or horizontal. I think it's important.

There are many, in fact. Maybe Vipul can -- there are many projects right now that are being assessed in terms of new product developments or new lines. So this is also in -- we are taking the use methods very, very seriously [ currently ].

So I would like to thank Mr. Ali for the patience that investors have shown in the group. As you rightly said, we have not given dividends since 2016. And one of the reasons is, of course, the results. So the reason that Mazen said that we do not have this intention is because as you rightly also pointed out, it is better that we invest this money into future projects because the kind of synergies that exist in this group with dairy, with oil, with poultry, with feed mill, we can do wonders based on the opportunities and the strengths that we have as a group. So these dividends -- these reserves that we probably would create by the end of the year, would be better invested in those projects. And I'm sure in the coming years, you will see the results both in terms of the share prices as well as in terms of dividends.

[ Sharma ], we hope so. We hope so. The return is not necessarily in dividends, also the share price. The share price goes back, that also a return for us. So I know if we see worldwide growth stocks, the return is mainly because of the appreciation of the share price, not necessarily from giving dividends. So yes, we don't mind so long as there is a bit of transparency also into the market in terms of market disclosure on your future expansion projects that we're currently assessing. So that gives a bit of support and to the share price as well in terms of transparency, understanding the future prospects.

Absolutely. Thank you, Mr. Ali.

Thank you. Anyone else who have any other questions?

All right. We would like to thank you all for attending or discussion half 1 2025. Thank you very much. Appreciate it. Thank you, Mr. Vipul, Mr. Mazen.

Thank you so much. Thank you so much, gentlemen.

Thank you. Thanks.