Gulf International Services Q.P.S.C. (GISS) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to Gulf International Services. I'd like to remind everyone that this call is being recorded. [Operator Instructions] For this call, there will be no question-and-answer session. Thank you. I would now like to turn the call over to Bobby. Please go ahead.

Thank you, operator. Hello, everyone. This is Bobby Sarkar, Head of Research at QNB Financial Services. I wanted to welcome everyone to Gulf International Services GIS Second Quarter and First Half 2026 Results Conference Call. So on this call from QatarEnergy's Privatized Companies Affairs Group, we have Sami Mathlouthi, who's the Assistant Manager, Financial Operations; Saoud Alabdulghani, who is the Head of IR and Communications; and Ilham Fassy,who is the Senior Financial Management Analyst. So I will now turn the call over to Saoud to go ahead. Okay, Saoud, please go ahead.

Thank you, Bobby. Good afternoon, everyone, and thank you all for joining us. Before we go into the business and performance update of GIS, I would like to mention that this call is pure for the investor of GIS, and no media representers should be attending this call. Additionally, please note that this call is subject to GIS disclaimer statements as detailed on Slide #2 of our presentation. Moving on to the call on Thursday, 13th August 2026. GIS published is a result of the 6-month period ended 30 June 2026. And during today's call, we'll go through these results and provide you with an update on key financial and operational highlights. Today in this call, we have Sami Mathlouthi, Assistant Manager for Financial Operations; myself, Saoud Alabdulghani, Head of Investor Relation Communications; and Ilham Fassi, Senior Financial Management Analyst. We will structure the call as follows: First, I'll provide a brief overview of GIS ownership structure, its competitive advantages and overall government structure. Secondly, Sami will provide an overview of GIS' financial and operation performance as a group. Then Ilham will update you on the performance of each operating cement. To start with, as detailed on Slide #6 of our presentation, the ownership structure of GIS includes 2 main shareholders, QatarEnergy with a 10% stake being the parent shareholder and GRSIA with a 21.9% stake as the largest asset shareholder. As detailed on Slide #5, QatarEnergy provide most of the head office functions to a service stable agreement, the operation of GIS subsidiaries independently managed by their respective Board of Directors, along with the senior management team. The structure of the Board of Directors detailed on Slide #7 of the IR presentation. In terms of competitive advantages, as detailed on Slide #8, all of the GIS company are strategically placed having a significant market share in their respective business sector within Qatar. Starting with our Drilling segment. Gas Drilling International is the only drilling service provider and maintains a market share of over 50% in offshore tailing services. While also holding the largets market share in onshore oil and gas drilling services in Qatar. This position is supported by a proven track record and well-maintained fleet. In aviation, gas helicopter is the sole provider of oil and gas helicopter services in Qatar and is one of the largest helicopter operator in the MENA region. The company also benefits from a modern fleet and regionally diversified operations. In addition, GIS benefit from a diversified portfolio, Al-Koot is one of the leading medical insurance provider in Qatar, while our catering operation continued to provide services for offshore operations and other industrial customers. All of this supported by an experienced senior leadership team for the expertise across the group various business segments. In terms of the governance structure of GIS, you may refer to the IR presentation, Slide 24, 25, which covers various aspects of the GIS corporate governance in detail. I'll now hand over to Sami to give an update on the financial performance of the company.

Thank you, Saoud. Good afternoon, everyone, and thank you for joining us. We will walk you through an overview of the consolidated results and present an update on the company's financial performance. Within the trading segment, performance during the first half of 2026 reflected lower activity levels across both the offshore and onshore businesses. Nevertheless, all temporarily suspended offshore rigs resume operation by the end of June, supporting a recovery in activity levels, while onshore activity remained relatively stable. The segment continues to focus on optimizing asset utilization, maintaining operational readiness and supporting client requirements. In the aviation segment, domestic buying activities remained below historical levels during the period, although international operations continue to provide resilience and support overall performance. By the end of the reporting period, the majority of aircraft has resumed operations. The segment remains focused on enhancing cost efficiency, maintaining steadiness and ensuring operational resilience. Within the Insurance segment, Al-Koot maintained strong operational momentum through the period. Its resilient business model and disciplined execution portable performance and continued contribution to the group overall results. The Catering segment operated in a challenging environment during the first half of 2026, as raising good prices and related cost exerted pressure on margins. The logistical restrictions continue to higher food and operating costs. Despite these challenges, the segment recorded only a slight reduction in profitability during the period. Moving to the group financial performance. For the 6-month period ended 30th of June 2026, GIS supported revenue of QAR 2.2 billion, an EBITDA of QAR 425 million and a net profit of QAR 67 million. Earnings amounted to QAR [indiscernible] compared to [indiscernible] in the corresponding period of last year. The group revenue declined compared to the first half mainly due to reduced contributions from the Drilling and Aviation segment. Within the Drilling segment, revenue was impacted by the temporary expansion of the offshore rig and the conflict, while some onshore rigs remained off on track during the period. The Aviation segment also recorded lower revenue mainly due to reduced domestic activity and lower performance within the maintenance, repair and overall business. It's particularly due to lower spare part sales. These impacts were partially offset by stronger performance from the insurance segment, where revenue growth was mainly driven by the medical line of business. The Catering segment also recorded a modest increase in revenue during the period, driven by the continued growth of AMWAJ Catering Services. Positively operational condition improved towards the end of the reporting period with all affected drilling rigs and the majority of aircraft resume operation by the end of June 2026. The group profitability declined compared to the first half of last year, mainly reflecting lower revenue contribution from the Drilling and Aviation segment. Performance was also impacted by higher operating costs within the Aviation segment, together with an increase in net claims incurred within the medical insurance business. On a quarter-on-quarter basis, revenue in Q2 of 2026 declined by 6% compared to Q1 2026. The decline was primarily due to lower contribution from the Drilling segment following the expansion of several offshore rig. The Aviation segment also reported lower revenue, reflecting the temporary reduction in flying activity during the quarter. These impacts were partially offset by stronger performance in the Insurance segment supported by increased premiums, new policy adherence and decline growth. The Catering segment also recorded modest revenue growth during the quarter, driven by the continued expansion of AMWAJ Catering Services. As a result, the group reported a net loss of QAR 9 million during the second quarter of 2026 compared to a net profit of QAR 76 million in the previous quarter. This decline primarily reflected lower contributions from the Drilling and Aviation segments, partially offset by our investment income within the insurance segment, supported by favorable capital market movements. Despite these challenges, GIS maintained a strong asset base and a healthy liquidity position. As at 30th of June 2026, total assets stood at QAR 11.7 billion while cash and certain investments amounted to QAR 0.9 billion. The reduction in total cash balances was primarily attributable to the distribution of the 2025 dividend and the settlement of insurance times. I will now hand over to Ilham to walk you through the segmental review.

Thank you, Sami, and good afternoon to every one of you. Starting off with Drilling. The Drilling segment reported a revenue of QAR 690 million for the first half of 2026, representing a decline of 30% compared to the corresponding period last year. The segment recorded a net loss of QAR 85 million. Performance was impacted by reduced activity levels across both offshore and onshore operations. Offshore revenue was primarily affected by the temporary suspension of several rigs in March 2026 together with the advance of revenue from a jack-up rig whose contracts expired during the third quarter of 2025. Onshore performance was also impacted as certain rigs remained off contract during the period. In addition, revenue from the lift boats and barge business was affected by scheduled maintenance on one left during the first quarter. On a quarter-on-quarter basis, the Drilling segment reported a net loss quarter 2026 compared with the net profit in the previous quarter. The decline was primarily driven by lower revenue, reflecting the continued suspension of several offshore rigs for most of the period. together with the suspension of an additional onshore rig. However, on a positive note, all affected offshore rigs recent operations by ended supporting a gradual improvement in activity levels and asset utilization. Moving on to the Aviation segment. The segment reported a revenue of QAR 552 million and a net profit of QAR 74 million in the first half of 2026. The segment continued to operate in a challenging environment during the first half of the year. Revenue declined primarily due to lower domestic flying activity as well as reduced MRO revenues, particularly from lower spare part sales. These impacts were partially offset by stronger contributions from international operations, including improved performance in Libya. Profitability also decreased compared to the prior year, due to lower domestic aviation activities, relatively higher operating costs, higher foreign exchange revaluation losses and a net monetary loss related to hyperinflationary accounting adjustment within RHH Turkey. On a quarter-on-quarter basis, the segment reported a lower revenue in the second quarter of 2026 compared to the previous quarter, mainly reflecting reduced domestic flying activity. International operations remained resilient and positive mitigated the impact of lower domestic utilization. However, profitability softened as the decline in domestic activity outweighed the gain from international markets. Positively, the majority of aircraft had returned to services by the end of June, supporting a gradual recovery in utilization rates and overall operational performance. Now moving on to the insurance segment. Insurance segment delivered strong growth during the first half of 2026, with revenue increasing 25% year-over-year to QAR 822 million, and net profit increasing by 4% year-over-year to QAR 73 million. The growth in revenue was mainly driven by continued expansion within the medical line of business, supported by premium growth policy renewals and new contracts. Profitability benefited from the strong top line performance as well as exceptional performance from Al-Koot investment portfolio. Higher investment income was a significant contributor to earnings during the period. Compared to the previous quarter, both revenue and profitability improved, supported by increased premiums, new business generation, renewals at improved rates and stronger investment income resulting from favorable capital market conditions. Finally, to the Catering segment. The Catering segment reported a slight increase in its share of revenue compared to the corresponding period of last year, primarily driven by higher mandates and the successful mobilization of new contracts. However, share of net profit declined slightly due to higher food and operating costs. Quarter-on-quarter basis, share of revenue increased modestly, supported by continued operational growth. Nevertheless, profitability declined compared to the first quarter as higher food and related operating costs continue to weigh on margins amidst logistical restrictions. That wraps up the segmental review. I will now hand the call back to Saoud for closing remarks.

Thank you, Ilham. With that, we conclude our call. We'd like to thank our investors for their continued trust and support, and we look forward to speaking with you during the next earnings call.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.