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

Hello, and welcome to Widam Conference Call. Please note that this call is being recorded. I would now like to hand the call over to our moderator, Phibion Makuwerere. Please go ahead.

Thank you, Mark. Good afternoon to you all, and thank you all for joining us today for Widam 4Q FY 2024 earnings conference call. My name is Phibion with QNB Financial Services. Today, I have the pleasure of introducing Widam's Finance Manager, Yasin Ibrahim. And as if usual, he will go over the performance, and we have a Q&A session immediately afterwards. Let me turn over the call to Yasin. Please go ahead.

Thanks, Phibion, for the introduction. Hello, everyone. First of all, thank you, everyone, for attending the conference call. And then I would like to inform you that Widam reported a net loss of QAR 56 million in 2024 compared to a net loss of QAR 36 million in 2023. And a significant factor behind this change is the government subsidy received in 2023, totaling to QAR 115 million, which included subsidies for 2021, '22 and '23, while the government subsidy in 2024 amounted to QAR 38.4 million. Aside from the government subsidies, the company achieved total revenue of QAR 544 million, representing a 3% growth compared to 2023. Furthermore, Widam managed to achieve a 3% reduction in the cost of sales. Consequently, the company recorded a gross profit of QAR 9.3 million compared to gross loss of QAR 24.4 million last year. This demonstrates that Widam was able to source inventory at competitive prices, while maintaining high-quality meat and generate higher margins. Now next, I'm moving towards the explaining further on the revenue side of the business. And that's -- the first is domestic sale, which has overall increased by 23% compared to last year. The material gross margin improved significantly, partly due to successful procurement strategies, including long-term purchase planning and negotiated rates for long-term orders. Operational costs remained similar to last year despite facing severe competition from smaller market players, impacting our margins in certain segments. Widam continues to look for ways to improve its processes to maintain its market share and competitiveness. Further going down into the detail of domestic sales, there are 2 major sales, B2B and B2C. In B2B, business-to-business segment, Widam performed exceptionally well in the HORECA industry, traders, retailers and wholesalers, achieving a 30% growth in sales. The addition of dedicated sales team members over the last 18 months has helped us penetrate the market and expand our customer base, supporting growth in sales and margins. The next segment is business-to-consumer, home delivery and butcheries, saw an overall 23% increase in revenues. The home delivery application significantly contributed to this growth. The foundation of our home delivery success lies not only in the increase client base and application utilization, but also on our focus on quality products, excellent service and consistent supply. And we continue to explore new butchering locations, ensuring that we perform appropriate research and due diligence to achieve growth in revenue and margins. Unlikely in the past, we were having many butcheries, but recently, whatever we are trying to achieve is not only the revenue and the footprint, but with the profitability approach with the margins that we are trying to achieve. The next part in the profit and loss, you will be seeing is other income, which is amounted to QAR 41.4 million, of which QAR 38.4 million related to the reimbursement of cost by the State of Qatar for services provided to date and QAR 2.6 million from dividend income on investment and equity shares. On the cost of sales part, Widam has been collaborating with suppliers and expanding our partnership with foreign suppliers to secure a steady supply of high-quality products at competitive prices, and we are consistently working on this to improve our margins. Here the next, you can see the decline in G&A by 19% decrease compared to last year. That is primarily due to one-off inventory provision we made last year for the Sudan branch. As has been mentioned in the earlier conference calls, due to the war type situation in Sudan, we have to make a provision, which was already done in 2023. So that's where the decline is coming from. And we are continuously managing our cost, maintaining them at reasonable levels or reducing them where possible. Now I just would like to talk about some opportunities and challenges for 2025, and then this should be the one that you guys should be aware of that the -- number one is the domestic market has been challenging over the last 2 years. We understand that and due to the increased competition. However, Widam is continuously working on the strategies to achieve growth in market share, revenue and margins. For instance, our agreement with Vibra for frozen chicken, branded as Nat chicken, helps on consistent improvement and substantial growth year-on-year. Sales increased from QAR 43 million in 2023 to QAR 82 million in 2024, with consistent margin improvements benefiting our bottom line. Another news is like Widam has announced the receipt of a letter from the government, awarding the company QAR 38.4 million as the compensation for the cost incurred by the company for services extended to the government for the year 2025, which we already have received last year. In 2023, we received for the previous years, like '21, '22, '23, and we received this amount in '24. Now we have a letter from the government that we'll be receiving this amount in 2025 as well, which is a good sign. The next is like we were doing a government program, Mubadara, which we were living on a year-to-year basis that we -- the government was awarding us on a year-to-year basis. But the good thing here is that the company has won a tender on this for the next 3 years for Ramadan and Adha, which includes the national initiative to encourage local production and consumption. And that's all on the P&L side. On the balance sheet side, that is just a normal movement. But on the significant drop in the cash and bank balance, you might witness, which is used to repay the Islamic borrowing and invest in working capital. Okay. So at this point, that's all I have for you. Please feel free to ask any questions you may have.

[Operator Instructions] As there are no further question at this time, I'd like to hand the call back over to Phibion.

Okay. Thank you, Mark. It's unfortunate that we don't have questions for now. But should you have questions, if you think of other questions later on, please feel free to reach out to QNB Financial Services or to the Widam management directly. Thank you all for joining us, and thank you, Yasin, for taking us through the numbers. Please do join us again in the future for future calls.

Thank you, everyone.

That concludes today's call. Thank you all for joining. You may now disconnect.