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

Hello, and welcome to the Qatar National Cement conference call. I would like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome Mr. Roy Thomas to begin the conference. Roy, over to you.

Thank you, Bhavesh. Hello, everyone. This is Roy Thomas from QNB Financial Services. I want to welcome everyone to Qatar National Cement Company's Fourth Quarter and Year-End 2023 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; and Saqib Parvez, the Head of Finance and IR Officer. We will conduct this conference call with management first to giving 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.

[Foreign Language] Good afternoon and happy new year for everybody. First, thank you for taking this time to join us for the fourth quarter conference call. This meeting will be covering the following topics: Financial performance, challenges, future plans and outlook, and if you guys have any questions. So let's start without any further delays. Financial performance of 2023. As expected 2023 was quite challenging and tough in terms of local demand for cement. Revenue has declined mainly due to overall decrease in demand of cement after 2022. Despite the external challenges, we posted profit of QAR 205 million compared to 227 million in 2022. A decrease of 10% despite a 35% in revenue on a year-to-year basis. Shareholders equity as on December 31, 2023, amounted to QAR 3.09 billion compared to QAR 3.08 billion at the end of the previous year, which reflected our robustness of our financial strength. It gives me a pleasure to announce that the Board of Director has recommended to distribute 30% cash dividend to our valued shareholders. Some of our achievements in 2023, despite the external challenges, we have not lost our focus and we are right on track to achieve our goals for 2023. Increase in the clinker and washed sand production to improve the strategic inventory, rationalizing the production costs, especially in the consumption of gas, electricity, commodity, material and other costs, adopting an updated organization structure within the context of operational excellence and business enhancement, digital transformation in order to improve efficiency, effectiveness of the operation, successfully sold plant #1 asset amounted to QAR 10 million. However, we did not recognize this in the revenue of 2023. During the year, we organized campaign to clean the beach. We have already planted 1,000 trees in our premises, and we'll continue planting and we have a very ambitious goals to achieve this year and with regard to contributing to the environment. We have done a blood donation and increased health check. The company employees and I participated in this humble and honorable cause. We believe that a clean and green environment is essential to our prosperity and sustainable growth. Some of our future plans and expectations for the year 2024. We will continue our effort to finish the design and start building the warehouses in our land in the Qatar Doha Industrial City, Street #10, reengineer the production process and to optimize operation costs and make more [ agile or ] responsive. The company has continued to seek alternative and sustainable energy sources. We will continue our effort to drive the maximum possible value from each QAR being spent, encouraging the culture of multi-tasking within our employees and obviously to have a 0 accident at workplace. Some of our future outlook, we trust [Foreign Language] in 2024, it will be a better year than 2023. The volume will increase, hopefully. This obviously came due to the government announcement of procurement plan for 2024, which was around QAR 70 billion. Now I give it to Mr. Saqib Parvez to go through some of the financial figures here.

Thanks. I would like to give a brief overview of the financial income statements. Our revenue has declined by 35%, like it's due to the decline in the volume in the market. Currently the market is quite challenging, but hopefully, we thought that things will be better than the '23 in this year. The cost of sales, like we have -- due to some cost optimization and cost control initiatives, we managed to reduce our cost by 44%. So consequently, the gross profit has [ dropped ] by 14%, other income has increased by 77%. Like we have a good cash balance available that we took, spotted as opportunity to earn some income for our shareholders. Selling expenses have increased by [ 29x ], G&A has slightly increased, and net profit has slightly decreased by 10%. It is enough. You may go ahead with the Q&A session.

[Operator Instructions] Our first question comes from the line of Joshua Martin from Ashmore Group.

I was hoping you guys talk a bit more about when management really see demand growth coming over the next 12 months? I know you mentioned the QAR 70 billion spending, but is there any project specifically, you can see being quite expansioning to volumes in the market more generally? And then following on from that, the same sort of question, but perhaps on a longer time horizon, say, 5 years.

Well, it was announced through [ Qatar National Doha Customers ] that there will be some projects in Qatar for the next year or this year actually. In 2024, will be QAR 70 billion. As well, they have so many projects and Ministry of -- I think we do have other projects announced about we officially announced QAR 70 billion. And now just to shed more light, I think in health center in development will be around QAR 340 million. Schools, there were QAR 750 million. Other program in schools QAR 1.7 billion, West Bay and Central Park, around QAR 385 million and so on. Qatar University project, we have a significant project, which is around 1.7 -- QAR 1.8 billion. So this is where the figures are coming from.

So just highlight of some major products, like we're just trying to give a glimpse into the period in 2024. Hopefully, things will be quite good.

And perhaps on a longer-term horizon, where do you really see that change coming from?

Is there any other question?

No, I think that there was -- so just a follow-up question, I think, from Ashmore. Do you want to take that?

Just the same sort of question, but maybe on a longer-term horizon, say, 5 years?