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

Hello, and welcome to Qatar National Cement Conference Call. Please note that this call is being recorded. [Operator Instructions] I would like to hand over the meeting to our moderator, Roy Thomas. Roy, please go ahead.

Thanks, Mark. Hello, everyone. This is Roy Thomas from QNB Financial Services. I want to welcome everyone to Qatar National Cement Company's Third Quarter and 9 Months 2024 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 reviewing the company's results followed by Q&A. I will turn the call now over to Engineer Essa Mohammed Ali Kaldari. Go ahead, Engineer Essa.

Okay. Thank you, [Foreign Language] and good afternoon, everybody. First, let me thank you for taking the time to attend our meeting. This meeting will cover our third quarter financial performance and some of the challenges and future plans. And at the end, we'll have a question and answer. Starting with our financial performance for the period ended -- for the third quarter of 2024. As you are aware, 2024 is quite challenging and tough in terms of local demand for construction material. Revenue has declined mainly due to overall decrease in demand of cement in the state of Qatar. Despite the external challenges, we posted profit of QAR 47.5 million compared to QAR 50 million third quarter-to-quarter with a decrease of around 6%. Some of our achievements during the third quarter, we were able to secure a few notable accomplishments. We continue rationalization production costs, especially in electricity, commodity material and other costs. We are exploring at the moment new opportunities as for our projects to increase our market share. And we are pleased to announce that we have achieved 1 million hours of safe workplace without LTI. Some of our future outlook. We are looking -- we are living in an unprecedented macroeconomic challenge, which are affecting us, our customers, suppliers alike. However, we are looking forward for next year as QatarEnergy, Ashghal and other private sector project will be floated, awarded. We will keep optimistic and every dark cloud has a silver lining. I would like to share a few updates. Ashghal has awarded tender amount of QAR 1.3 billion during 2024. We will be realizing the effect probably by early next year. In addition to this, we have provided detail of the projects in IR presentation. Now I'll pass the mic to my colleague, Saqib, to give you more -- shed more light about our financials.

Thank you so much. I would like to start to give more detail -- a bit more detail about the income statements and achievements. So let's start with the condensed entire income statement for the 9 months ended September. Our sales is QAR 291 million compared to QAR 354 Cost of sales has reached QAR 186 million compared to QAR 209 million. This is an 11% decline. The gross profit has QAR 104 million. Other income is a bit decline. It's -- we have posted QAR 43 million. Selling and distribution expenses is a significant decline due to last year, the rebate was offered to the customers. So this year, we did not offer the rebate. So G&A is a slight decline by 0.3% and the net profit is QAR 130 million compared to QAR 152 million, is a 14% decline in the net profit. So overall, this -- like we can move to the next session, the Q&A day, and your questions are welcome, and we are happy to answer those questions.

[Operator Instructions] Your first question comes from the line of Alessandra David with Ashmore.

I just had a few questions if that you could answer for me, that would be really helpful. I think, firstly, it would be just from my perspective, it would be interested -- I'd be interested in understanding the trajectory of your selling and distribution expense going forward. So your SG&A intensity dropped quite meaningfully over the 9-month period this year. I was just curious to understand explicitly what you've done to get us to this level and what we can kind of expect going forward? That would be my first question. My second question would be if you could give an overview of pricing and the trajectory of pricing for the rest of the year and into 2025, not actual specifics, just more directionally would be helpful and the same on volumes year-to-date versus last year and sort of the outlook that investors can expect from that.

See, like when I see from my perspective, both questions are connected. So I would like to start with the second question, right? As of now, we can't see anything with respect to the pricing. It will be any discount will be offered. So however, having said that, as we mentioned in the speech by the CEO, Ashghal and other entities have awarded some contracts. So we are expecting that the 2020 would be quite a bit more better than this year. So now I'll circle back to your first question about the selling and distribution. In the last year, in 2023, we offered some rebates, like due to the competitive nature of the market. So that was the reason that the selling and distribution expense was a bit higher, right? So this year, we offered some discount in the price in the first quarter. But the rest of the year, like we didn't offer anything, right. So we are in the last quarter of this year, it doesn't seem that we are going to -- there will be any radical change in the price itself. That's it.

And if you could just touch on volumes and sort of the trajectory that you're expecting this year, I guess, from what I've inferred from your call and looking through your results, this sort of seems like it should be picking up next year. But maybe if you could go into a little bit more detail on these contracts and just sort of what we can expect from a volumes point of view, that would be really helpful?

Yes. Mostly, we are relying on the information available in the public domain. So we are extracting that information from the reliable sources like Ashghal website, Ministry of Commerce and some other like data vendors who are selling information, is collecting and we are sourcing information from them. So like the information we provided about the part of the tender projects by Ashghal, it is available on their website. So like if you -- on that we can share the link with you like you can request through e-mail, I will share the link with you. And otherwise, you can access the website and information is available there.