Mekdam Holding Group - Q.P.S.C. ($MKDM)

Hello, everyone, and welcome to Mekdam Holding Group Conference Call. Please note that this call is being recorded. I'd now like to hand the call over to Shahan from QNB for opening remarks.

Thank you, Eli. Hello, everyone. I want to welcome you to Mekdam Holding's First Quarter 2026 Financial Results Conference Call. So on this call from management, we have Ehab Naser, Group CEO; Bara Sami, Group GM; and Banan Serhan, Group CFO. So as usual, we will conduct this call with first management reviewing the company's results followed by a Q&A session. I will turn the call over now to Ehab. Please go ahead.

Thank you. Thank you. Good afternoon, ladies and gentlemen, and thank you for joining Mekdam Holding Group Q1 2026 Investor Call. We appreciate your continued trust and interest in the group. We entered 2026 in a complex operating environment shaped by regional geopolitical development and ongoing supply chain disruption. Despite these challenges, Mekdam delivered a resilient and disciplined performance in the first quarter, demonstrating the strength and adaptability of our business model. Our approach remains clear, balancing growth with operational discipline, while ensuring continuity of execution across all our business segments. From a financial perspective, we achieved strong revenue growth of 25%, reaching almost QAR 175 million compared to almost QAR 140 million in the same period last year. This growth was primarily driven by a continued momentum in our Technology Services segment alongside the stable contribution from manpower and engineering projects. At the profitability level, gross profit remained stable at QAR 26.2 million despite the increased cost pressure, particularly in material, subcontracting and logistics. Operating profit stood at QAR 11.1 million, reflecting a higher general and administrative expense and burden increase in provision as part of our risk management framework. Net profit for the quarter reached QAR 8.5 million, impacted mainly by higher finance costs as we increased utilization of the bank facility to support working capital and ensuring continuity of project execution under current conditions. Importantly, while margin experienced a temporary pressure, the underlying fundamentals of the business remained strong. Our revenue growth continues to be robust, and our profitability remains solid and within a healthy operating range. At the same time, we have seen clear improvement in cash flow quality with positive operating cash flow of QAR 21.2 million, reflecting strong working capital management and improved collection efficiency. Operationally, the group continues to demonstrate strong momentum. During the quarter, we secured new contracts worth approximately QAR 120 million, while our project backlog stands at around QAR 3.1 billion, providing strong visibility of future revenue. In addition, the remaining work of approximately QAR 1.6 billion supports a high degree of predictability over the medium term. Looking ahead, we view the current pressure as temporary. As conditions stabilize, we expect a gradual normalization in cost and improvement in margin with a strong backlog, disciplined execution and a diversified portfolio. We are well positioned to capitalize on the upcoming opportunities across our core sectors. In closing, Mekdam remains committed to deliver sustainable value to its shareholders through disciplined growth, effective risk management and continued operational excellence. Thank you, and I will be glad to answer your questions.

[Operator Instructions] Your first question comes from the line of from Investments.

And my question is regarding your backlog for full year '26. And what is your outlook for the full year given the current circumstances and everything that's happening right now?

We thank you for your question. As we mentioned earlier, our backlog is QAR 3.1 billion with the remaining value to be executed of around QAR 1.6 billion. And this volume, it gives us confidence about the future business of the company. We have enough business to continue our operations. And let me be very clear about what happened. Despite the growth in Q1 in our revenue, our revenue increased almost by 25%, but the net income declined by 25%. This is mainly due to 3 reasons. The supply chain due to the geopolitical situation. This is one. And several locations got impacted by what happened and some site work, they put the work on hold. And the third reason is there was a delay in awarding some contracts. All these factors together impacted our net profitability. But we believe what happened is temporary. If we believe the situation is temporary, yes, we are confident that Mekdam will return back to continued growth.

[Operator Instructions] As of right now, we don't have any pending questions. I'd now like to hand the call back to Shahan for closing remarks.

Okay. Thank you, everyone, for joining the call, and I would like to thank management for giving us an update on the first quarter, and we will pick this up again in the coming quarters. Thank you.

Thank you. Thank you very much, everybody, for attending our conference call, and we are looking for you -- to have you again in the next quarter. Thank you. And we hope the next quarter will be better.

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

Goodbye.