Widam Food Company Q.P.S.C. (WDAM) Earnings Call Transcript & Summary

Good day, and welcome to the Widam Food Quarter 2 2021 Results Conference Call. Today's conference is being recorded. At this time, I would like to now turn the conference over to Mehmet Aksoy. Please go ahead, sir.

Hi. Good afternoon, ladies and gentlemen. This is Mehmet Aksoy from QNB Financial Services. I would like to welcome everyone to Widam Food's Second Quarter 2021 Financial Results Conference Call. On this call from Widam, we have Mr. Ahmed Jamous, who is the Finance Manager. We will conduct this conference call first with brief comments on the presentation followed by the Q&A. I will now hand the call over to Mr. Jamous to get us started. Ahmed, please go ahead.

Hello, ladies and gentlemen. I'm Ahmed Jamous from Widam. I'm Finance Manager of Widam Company. I will introduce the half quarter (sic) [ half year ] results for the year -- for the period ended 30 June 2021. Our result is losses by QAR 15.5 million for the half year compared to the same period for the last year, profit by QAR 49.5 million. The main reason for this decrease to increase is the demand for the red meat because the prices increased in tandem after subsidy lift. As shown in our financial statement, revenue decreased by 32% compared to same period from the last year, from QAR 280 million to QAR 390 million, and the costs increased -- decreased by 51%. This is coming from allocating the resources to many countries after the subsidy lift because on the subsidy period, we're focusing on the one country, Australia. Now we're focusing on the other country, Australia, Turkey and South Africa, Sudan, Kenya, Tanzania, et cetera. So we'll come to any questions, please.

Ahmed, shall we open up for questions?

Yes.

Operator, can we initiate the Q&A session, please?

[Operator Instructions]

This is Mehmet again from QNB Financial Services. While we are polling for questions, if I can start off with a question of my own. Mr. Jamous, can you please give us some color about the meat market dynamics in Qatar after the government subsidy is lifted? Now that 7 months have passed since the lifting of subsidies, do you see any substantial or permanent changes in customer choices?

Thank you, Mehmet. We did the study for the market demand, compared this year and the last year. There was a drop -- a big drop for the chilled items and the fresh item on the market, so an increase in the frozen items. That's for this period. We cannot judge and take the decision for only 6 months for -- after subsidy lift. So we don't have a clear picture until now. But the demand -- yes, the demand has changed between the lamb and beef. Yes, there is change -- big change between the lamb and beef. And frozen increased for the catering company. Last year, the catering company bought from Widam, has subsidy; now bought from themselves -- or from Widam, direct from the supplier, the frozen meat. So until now, we don't have a clear picture 100%. We need, I think, minimum 1 year to get a clear picture for the market demand. But we have the information about that. Our market share -- let's say, from the lamb, our market share now is 65%, around 65% for the -- sorry, for this year, 35%. Our market share last year was 70%. So yes, the market has changed between frozen and the fresh items and chilled items.

Operator, can you open up for questions now please?

So we'll now move to our first question over the phone, which comes from [ Sayed Azimut] from QInvest.

I have 2 questions. The first one relates to the top line. So as you have seen quite a big drop in revenues from last year and there seems to be a lot of price elasticity in the market, is the company thinking about readjusting the price downwards to increase the demand? Or do you think like this is the sweet spot that you want to be in? And another related question to this is that should we expect this level of revenue to be the new normal for the company? Or is this a temporary drop and you expect the market to adjust upwards towards the second half of the year? The second question is related to government compensation. So does the QAR 16 million -- QAR 16 billion figure for the first half of the year come solely from the subsidy provided during Ramadan? Or does it include any other subsidy for -- from countries apart from Australia? And is this -- should we expect the same figure to show up in future financials as well? Or would this change -- is this expected to change as well?

Thank you. First question, for our business model and our demand for the top line, as I told Mehmet, currently, we cannot judge the market. The market is changing daily, daily. The volume increasing from right side and decreasing from left side. So the market is still changing until today. So we cannot take action to change our model until now. So we need some time to clear the picture and take action if we want -- if we can change the model or not. In Widam, last month, we started new -- it's like a new business, we call B2B business, to make our processing meat. So this a new line in the market. Last year, there is no processing area. So this year, we're starting for this processing because the market demands, needs this item, new item. So honestly speaking, we cannot take action at this time. We need minimum at the end of the year to be in the clear picture. So for second question regarding the government compensation, it's coming from Ramadan, yes. And there is a small portion from the opening balance from the first 2 months in 2021. It's opening balance from Australia. It's coming from the subsidy. So we sell it and take compensation from it.

Okay. Just a related question. On this meat processing business line, do you have any guidance for the second half of the year on how much revenue we can expect from this new business line?

We cannot expect now because it's a new line. So we don't have the deals -- enough deals to give you the number. But for the second -- third quarter, I can give you good number. But now no, we don't have a number. We have estimated number, but it's not showing the reality.

[Operator Instructions] We'll now move to our next question over the phone, which comes from [ Mostafa Ameer ] from Al Rayan Investment.

This is [ Shabil Kawilala ] from Al Rayan Investment. I just wanted to know about the -- in the first quarter call, you had mentioned that your selling per month in terms of metric ton is improving versus January. It's reached 120 million tons per month, and the target was 200 million. Are we still on the target? What has this been in the second quarter?

Sorry, I didn't hear you. Again, please.

Sorry. In the first quarter call, you had mentioned about selling of the meat is improving from 20 million tons a month in January to 120 million towards March and April. What has this been? And there was target to reach 200 million tons for the -- for all the products for 2021. So are we on the target there in terms of your monthly sales? Or where are we in the second quarter?

Okay. In the second quarter, yes, there is a bigger drop compared to last year same quarter. And compared to the first quarter, there is bigger drop because the government closed restaurants in this period. This quarter last year, the government closed all restaurants in May; this year, from March, closed all restaurants. The second thing, as I talked to Mehmet and QInvest, we don't have exact number until today. Demand daily change, daily change; not monthly, daily.

Right. Fine. Demand -- I agree with you, but what has been the run rate for the month? Is it like 100 million tons or less or 50 million? So just wanted to have a ballpark number as to what it is currently which you are selling.

For...

For the second quarter, the months like May, June -- April, May, June. What was the monthly tons in terms of meat sales?

Around 80 to 100 metric ton per month.

Okay, okay. And do you see that in the third, it's difficult, you said, to project, to reach higher than this? Or will it be able to -- will you be able to maintain this level in the future? Are you confident about that? Or what's the strategy or your thinking?

To maintain this level, we're working to increase this number to -- hello?

Yes.

Sorry. Yes. Now we are working to change the customer behavior from the import from other countries. Like Tanzania, we bring them last -- in June, let's say, we're starting from -- bringing the meat from Tanzania, Kenya so that we're increasing -- Sudan, so to increase this number -- the 80 to 100 metric ton, to increase to this second -- third quarter to 150. The market now increased from frozen -- increasing coming from frozen. We opened a line from the frozen. It's not enough -- it's not big enough for Widam. So we build -- [ we returned to Tanzania ].

All right. And in terms of your contract for the sale of camel meats, where are we? Is it on track? Are we getting the contribution on a quarterly basis? Because you had reported in Q1 that you get a quarterly contribution of QAR 5 million, this is reported in other income, by selling camel meat.

It's the same.

It's the same amount in the second quarter as well?

Yes, yes.

[Operator Instructions] We now move to our next question, which comes from [ Anastasios Dalgiannakis ] from [ Alfaz Investments ].

I just wanted to ask if you have any plans for any major investments to do or you just continue to wait and see the rest of the year or you have investments that you have programmed, sizable investments.

Okay. For our Widam investment and from our line of business -- of the meat business, now we're starting to make our facilities in Al Wakrah. So we will start next month [ the abattoir ]. We'll start next month. We'll finish after 1 year. It's coming to our business at the chiller and the processing area and all facilities to support the logistics or supply logistic for the meat. It's now our project -- currently project. Second thing, we have -- we plan to make expansion in our branch in Sudan because Sudan meat is increasing monthly. Per month, the volume is increasing. So we have a plan for the next month to make an expansion for our farm and make some modifications in our farm there. Other projects, yes, we will wait to see where the market will go forward. If the market will go into frozen, we'll invest with the frozen meat. If the market go with live, we'll invest for the live. We're still waiting. We cannot take action in this period.

Just to confirm, sir, there are no further participants queued over the phone for questions at this time.

This is Mehmet from QNB FS again. If there are no further questions, then we can wind up the call for today. I would like to thank everyone for participating in the call. Please do reach out to team at QNB FS or Widam if you have any further questions. Thank you.

Ladies and gentlemen, this does conclude today's call. Thank you very much for your participation. You may now disconnect.