Qatar National Cement Company (Q.P.S.C.) (QNCD) Earnings Call Transcript & Summary

Hello, and welcome to the Third Quarter Qatar National Cement Company's Conference Call. I would like to advise all participants that this call is being recorded. I'd now like to hand over to Roy Thomas to begin today's call.

Hello, everyone. This is Roy Thomas from QNB Financial Services. I want to welcome everyone to Qatar National Cement Company's Third Quarter 2022 Financial Results Conference Call. On this call from Qatar National Cement Company, we have engineer Essa Mohammed Ali Kaldari, the Chief Executive Officer; Viswanathan Hariharan, the Finance and Administration Manager; Sadiq Nimary, Finance and Administration Manager; and Saqib Parvez, the IR Officer. We will conduct this conference call with management first reviewing the company's results followed by a Q&A. I will turn the call now over to Engineer Essa Mohammed Ali Kaldari. Go ahead, Essa.

First, [Foreign Language] and good afternoon, everybody. This is Essa Mohammed Ali Kaldari, I'm the Chief Executive Officer of Qatar Cement Company. I'm delighted to host you on behalf of myself and Qatar National Cement Company management for third quarter earnings conference call. I trust that all of you will be having a good time and awaiting [ anxiously ] for upcoming FIFA matches. Now I would like to comment on the third quarter performance, 9 months 2022 performance overview. On the whole QNCD third performance -- third quarter performance is aligned with our expectations. As anticipated, sales volume had decreased due to a general decline in the market demand during the 9 months. The cost of sales has increased mainly to renegotiation of gas supply agreements and other general inflationary pressure. However, the net profit has marginally increased due to increase in other income and a reduction in sales and distribution expenses. I would like to highlight on a quarter-to-quarter basis, comparing second quarter to third quarter. The net profit has increased by 75.9%. Our cash with bank stands at QAR 700 million after meeting all the expenses of the 9 months and after even paying the 50% dividend of the QAR 197 million. Our corporate strategy overview, I would like to update you on the QNCD corporate business strategy. Sustainable cost optimization during the 9 months, we have [indiscernible] several areas of improvement, and we are well on target to achieve it. We are confident that those initiatives will optimize our bottom line. Improving productivity. We are revamping our IT infrastructure in order to be more responsive and flexible towards the needs of our businesses -- business partners, sorry. For instance, we are upgrading our ERP. We are upgrading our -- receiving facility, be it in cement plant and even in the sand plant which contributed positively and the turnaround of the trucks coming and going and leaving the [ premises ] of QNCD. Improving the market share. Our customers are at the heart of the business strategy. We dedicated sales team, our dedicated sales team has become more responsive to our customer needs. Moreover, we are closely monitoring the evolving needs of our customers and emerging [ trends ] and construction of industry. We believe that we have the resources and capability to accommodate this requirement. To our [indiscernible] that our customer base has increased from -- or it's increasing from quarter-to-quarter. Achievements included several tenders, which increased buying new equipment and replacing of our aging machinery. We have organized [ fit one ] health and safety orientation sessions for our employees and contractors -- as well as certifying our employees to be in line with international standards as well as our equipment. And we have secured reserve of the [ project ]. Just to highlight our outlook, our assessment for [ 2020 ] is the same. We are confident that the volume will remain at the same level. However, in the worst case scenario, it will be, as mentioned maybe earlier this year, will be 60% of the current volume. We -- and we have said that the demand will start picking up in 2023. Our assessment for the increased volume in [ '20 ] is a quite upbeat. We're ready to energize our [ plants ] in order to meet the demand. Contribution to the society and employee welfare, we believe that the healthy and strong society is part of our parcel of a strong and sustainable corporate growth, being responsible corporate citizens, we are well aware of our social obligation during the 9 months. As mentioned before, we have contributed donation to Qatar's Cancer Society. In addition, we have organized blood donation camps and as well as we have several games and dinner parties for our employees and even to our contractors. We have -- we hope that these humble -- these may enlight [indiscernible]. Finally, we feel very proud of our humble contribution to this historical event in 2022. We'd like to thank his highness Sheikh Tamim bin Hamad Al Thani, who is Emir of Qatar and the team who is working very hard to make this event happen. And thank you again, and I will leave Mr. Saqib to go through the financials.

Good afternoon to everybody. I would like to discuss with you about the interim condensed income statement for the period ended 30 September 2022. During the 9 months that I would say we [ secured ] the sales around QAR 551 million is a decrease of 9% from the last 9 months. The cost of sales stands at QAR 392 million. The gross profit is QAR 159 million. Other income has increased by 43% and stands at QAR 28 million. Selling and distribution expenses reduced by 49%, and the G&A, it remains same. And the share of profit has increased considerably to QAR 1.5 million from a loss of [ QAR 42,000 ] in the last year. In the whole, the net profit has comparatively increased by 2%. We can open the session for the Q&A. Mr. Essa will take the question-and-answer session.

[Operator Instructions] And your first question comes from the line of Ian Al-Habib.

This is Zohaib from [indiscernible] Investment. I've got 2 questions. Firstly, in the presentation, you mentioned that the prices have been increased. Could you give us some idea of when the prices were increased? And how much have they increased? That's the first question. The second one is on the gas supply agreement. Could you tell us more on when was the supply agreement, the new prices negotiated? When are they -- when have they been implemented? And what has been the change from the last time till now?

Thank you, Zohaib. The price has increased from 1 of September, September 2021, that's regarding your first question, it's increased from QAR 230 to QAR 250 that [ month ]. Regarding your second question, the gas contract were negotiated earlier this year and are effective from January 1, 2021.

Sir, you said this gas agreement was effective from January 1 of '22?