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

Hello, everyone, and welcome to Qatari Investors Group Conference Call. Please note that this call is being recorded. I'd now like to hand you over to our moderator for today, Roy Thomas. Roy, you may now go ahead, please.

All right. Thank you. Hello, everyone. This is Roy Thomas from QNB Financial Services. I want to welcome everyone to Qatari Investors Group first quarter 2024 financial results conference call. On this call from Qatari Investors Group, we have Joseph Abdo, the Chief Executive Officer; and Adel Senna, the Chief Financial 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 Joseph Abdo. Go ahead, Joseph.

Thank you, Roy. Hello, ladies and gentlemen. I will go through a review in English, then followed by the same review in Arabic, and then we will move to questions and answers. So ladies and gentlemen, it's my pleasure to welcome you to the earnings call of Qatari Investors Group, QIG. My name is Joseph Abdo, the CEO of the group; and here with me Mr. Adel Senna, our CFO. We are pleased to present to you the first quarter results of QIG Group for 2024. We will highlight the financial performance of the group and the progress that has been realized during the period. The group achieved a total revenue amounting to QAR 133 million for the period, which is lower than the same period of last year by only 1%. The Industrial segment of the group is showing signs of stability following a period of significant slowdown in the construction sector last year. In addition, other segments are growing compared to last year. The group net profit for the period amounted to QAR 43 million, a 20% decline as compared to the same period of last year as a result of cement price difference. Group EBITDA reached to QAR 76 million for the period, 7% lower than last year, also due to the drop in overall profit. Overall, the market is slightly favorable compared to last year. We look forward to a continuity in this direction. Finally, we continue to focus on the validation and execution of projects and the pipeline as part of our continuous efforts in implementing the strategy of diversification and investment to make more achievements that benefit the group and enable us to play an active 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 open for your Q&A.

[Operator Instructions] We have our first question from Seki Mutukwa from Ashmore.

Three questions, please, if I may, to start. The first one is just to sort of get an idea of what the domestic cement volumes did in 2023, please? The second question is from your presentation, you talk about the cement price declining in the first quarter, but an expectation that they -- or would have then reverted back to about QAR 250 a ton from the 1st of April. I'm just trying to understand what drove that sort of change? What is behind that? And then my final question, please, is just in terms of the diversification, perhaps an update on the particular projects and any key dates we should be aware of in terms of where the capital expenditure is going?

Thank you for the question. Concerning your first one concerning the domestic size in 2023, it is estimated overall around 5 million tons in the market. Overall market we're talking about. Now for the changes in the prices for your question number 2, we run some promotions during summer 2023 and the prices dropped down up to QAR 180 and sometimes QAR 170 for the tons. Then we decided to take it gradually up. And to take it gradually up, it's not easy. So we took it on 2 phases, QAR 220, at the beginning of the year and 1st of April, QAR 250. Your third question about the diversification, we are running a major project right now on the transportation and logistics and yard for empty containers. And the transportation, it is materializing. It's already in place. However, we are signing a couple of contracts to move containers now from the east part of the Gulf to Jeddah Port, with all the issues that are happening in Hormuz and in the Red Sea.

Next question comes from Zohaib Pervez from Al Rayan Investments.

You mentioned that there is some improvement and this is my understanding that there was some improvement in the volumes for the first quarter of 2024 for cement. Could you tell us what was your cement sales for the first quarter of -- in volume terms for cement and for sand?

Okay. This is Adam here. It's 409,000 tons in Q1.

409,000. And this was higher or lower by how much do you compared to first quarter of '23?

So that's 8% higher than the same period last year. So like-for-like comparison is 8% growth.

8% growth. And the price you mentioned is was lower during the first quarter on average, it was about QAR 220 and about 8% lower. That's my understanding, right?

Around 9% lower, correct.

Okay, 9% lower. And do you think that your this price -- now that the prices have increased to QAR 250, you believe that the prices are going to remain at this or you probably have to give another promotion during summer or the slower months. And what are your plans on doing there?

No. The prices will remain at QAR 250, okay? And there is one factor also that's going to happen. If the price of the gas is going to increase, unfortunately, we will have to reflect it also. And then we need to negotiate with the concerned parties in the government to increase the price. If the price of the gas would remain as it is, and we will know this by end May. So there is no reason not to keep the prices at the level of QAR 250.

That's a good point. I was actually coming to that, Joseph. So what -- to increase the prices, do you require the government approval? I mean, you have to submit the prices and then it goes. How does the price increase happen -- above QAR 250?

Officially no. But in practice, this is the practice in the past. We need to inform. But nothing will stop us from reflecting the implementation immediately. It's a formality. It's a matter of formalities. But it has to be justified. The only justification for a price increase is the price of the gas.

And any color on how much price of the gas will be increased? How much is it right now? How much will it go up to? Any idea on that?

Frankly, no idea. We are now in the negotiation. We did it intensively before EID. And now we are still waiting until they make that proposal to us.

Sounds good. And my last question is on the G&A expenses. So the first quarter of '23, it was QAR 36 million, this year it is about QAR 30 million. Are there any one-offs, any reversals because of this, the G&A has been lower? Or is this because you have done some cost control, et cetera?

Yes. So to answer your question, there's no reversal. This is a genuine year-on-year cost reduction driven by the legal fees and the expected credit loss.

Legal fees. Sounds good.

We have our next question from Seki Mutukwa with Ashmore.

Just on the diversification. So it sounded like from the transportation, you may be coming close to the end of that investment cycle perhaps. So just wondering in terms of looking at the debt, particularly the long-term debt, what your game plan is in terms of either reducing that? Perhaps you're at an optimal level of sort of net debt-to-EBITDA, just to understand, please, the debt side of things.

Okay. So I'll answer this. So in answer to your question, we currently have no plans to change the repayment of the debt. So we are continuing with the accelerated plan that we initiated a few years ago to settle the debt earlier. And right now, we still have our plan to settle the debt on time and we continue to do so.

Given so, what is that plan, if you don't mind, just a few minutes on that in terms of an acceleration?

Yes. So we had a time duration for the debt repayment, which we shortened this a couple of years ago, and the current maturity of our debt is by the end of 2029. That's when we will settle our full debt. As of now, this is the plan. This may change in the future, but as of now, this is the plan.

I will add on this one, that we have shortened it by 5 years, and we're sticking to it up to 2029.

We don't have any pending questions as of the moment. I'd now like to hand back over to the management for the final remarks.

All right. If there are no further questions, we would like to thank Qatari Investors Group management for the results update and answering all the questions. And we look forward to speaking to you all for the second quarter 2024 results conference call. Thank you.

Thank you.

Thank you.

Thank you for attending today's call. We all hope you have a wonderful day. Stay safe.