Qatari Investors Group Q.P.S.C. (QIGD) Earnings Call Transcript & Summary

Good day, and welcome to the Qatari Investors Group Q1 2022 Results Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Roy Thomas. Please go ahead, sir.

Hello, everyone. This is Roy Thomas from QNB Financial Services. I want to welcome everyone to Qatari Investor Group's First Quarter 2022 Financial Results Conference Call. On this call from Qatari Investor Group, we have Joseph Abdo, the Chief Executive Officer; and Ahmad Tawfiq, the Deputy Chief Financial 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 Joseph Abdo. Go ahead, Joseph.

Thank you very much. I will read my statement in English, then I'll read it again in Arabic, and then we will go for the question-and-answer. Ladies and gentlemen, it's my pleasure to welcome you to the earnings call of Qatari Investor Group, QIG. My name is Joseph Abdo, the CEO of the group. And here with me, Mr. Ahmad Tawfiq, our acting CFO. We are pleased to present to you the first quarter results of QIG Group for 2022. We will highlight the financial performance of the group and the progress that have been realized during the period. The group achieved a total revenue amounting to QAR 211 million for Q1, which is higher than the same period of last year by 10%. This growth was led by the industrial sector as a result of price increase in the cement as compared to last year. In addition, other sectors such as mobility and security systems have witnessed a significant growth as compared to the same period of last year. The group net profit for Q1 amounted to QAR 82 million, a 113% increase as compared to the same period of last year. This growth was effectively supported by operational optimization strategies that enhanced our gross profit margins by 47% and creating savings opportunities at the level of operating expenses to ensure higher returns to our shareholders. Group EBITDA reached to QAR 121 million for the period of Q1, 92% higher than last year due to operational excellence in the management of different sectors. Our aim will continue to maintain a sustainable growth in the group bottom line and create value for its shareholders. Finally, we will continue to be committed and support the strategy of diversification in investments during 2022 to make more achievements that benefit the group and make us play a role in supporting Qatar's economic vision. Thank you, and I'll move to the Arabic text. [Foreign Language] Thank you very much, and we're ready for your questions.

[Operator Instructions] Our first question today comes from Zohaib Pervez from Al Rayan Investments.

You mentioned that the increase in revenue is because of higher cement prices. Could you let us know what was the cement prices earlier, and what are they now? And when was this increase? Was this increase last year, or this was increase in the first quarter of this year?

The price -- the practice last year was QAR 230 for the tonne, and then it moved to QAR 250 the tonne. And then we have executed the increase in price starting effective September 2021.

Okay. September '21. Okay. So your cost of goods sold has declined significantly from QAR 123 million to QAR 99 million. So what happened? What changed? Which costs have declined so much?

Yes. Basically, the -- as compared to last year, the resumption of the production for our cement factory is the main -- the main reason for this decrease in the cost of sales. So the -- during the period of Q1 2021, we did not operate the factory and -- or the machinery did not operate during Q1 2021. But in Q1 2022, we did operate almost in more than 80% or 90% capacity. So this contributed to decline in the cost of production. On the other hand, we worked on different, I would say, improvements in the production cost that also contributed to reduce the cost of production.

I mean I just fail to understand how when your plant was switched off, it was not working, it had more cost than when the plant is working. I would have assumed that it should be the other way around because when the plant is working, you have the variable cost also. So why -- I just fail to understand.

Yes. But when the plant is stopped, you have inventory already, which already carrying cost, and the cost of the period of Q1 where there is no production, it's added to the cost of the inventory as well. So there is additional cost that is not allocated to production. You got my point?

And -- no, I'm sorry. I did not.

The period cost -- the fixed cost, the fixed cost, the period cost -- the fixed cost is being -- it's not allocated to the production. There is no production to be allocated for. While we had inventory already from previous periods, so the inventory already coming with that cost and you have additional cost to it that is not allocated to a certain inventory. So it's a period cost -- additional period cost if you don't have production.

Okay, okay, okay. Sounds good. There are no one-off cost savings in this, right?

I'm sorry, what is it?

Is there any one-off cost savings in this cost of revenue for the first quarter? There are no one-offs? This is purely because of resumption of...

No, no, no. This is the main reason, but also we have other programs for cost saving opportunities that we worked on during the period that also contributed to the enhancement of gross profit margin.

[Operator Instructions] It appears we have no further questions at the moment.

All right. If there are no further questions, we would like to thank the Qatari Investor Group's management for the results update, and looking -- look forward to speaking to you all for the next quarter's results. Thank you.

Thank you very much. Looking forward also. Have a good day.

Thank you. That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.