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

Hello, and welcome to Widam. Please note that this call is being recorded. [Operator Instructions] I'd like to hand the call over to Dana Al Sowaidi. Please go ahead.

Thank you. Hello, everyone, and [Foreign Language] to you all. This is Dana Al Sowaidi from QNB Financial Services. I would like to welcome everyone to Widam Food Company's Second Quarter 2025 Financial Results Conference Call. On this call from management, we have Yasin Ibrahim, Finance Manager. We will conduct this conference call with management first reviewing the company's results followed by a Q&A session. I will turn the call now over to Yasin. Please go ahead.

Thank you very much, Dana, for the introduction. Good afternoon, everyone, for attending the conference call. I would like to share that Widam reported a net loss of QAR 108.6 million in the first half of 2025 compared to a net profit of QAR 3.1 million during the same period last year. This shift is primarily due to the absence of revenue from international operations and reduced margin on domestic business. The domestic business market has become increasingly competitive with pricing pressure driven by smaller players offering aggressive rates and shifting consumer preferences. Additionally, rising cost of material from origin have further strained profitability. Despite these challenges, Widam remains focused on strengthening its core operations and exploring strategic initiatives to restore growth and improve margins. Now, let me provide further details on our revenue on the domestic sales. Domestic sales is comprising 3 -- 2 segments, and 1 is a subsegment, B2B, business to business and business to customer, which is B2C, and then subsegment is Mubadara program. Domestic sales, despite the 15% year-on-year decline, primarily driven by reduced demand and intensified market competition, we have taken proactive steps to manage costs. Gross margin were impacted due to pricing pressure, but operational expenses were successfully reduced by 3% compared to the same period last year. In B2B segment, which is mainly HORECA industry, traders, retailers and wholesalers, was overall underperforming in this period, witnessing a decline in revenue by 12%. In business to consumer, B2C, segment, home delivery and butcheries saw an overall 9% decrease in revenues, and we are actively exploring new locations for butcheries as part of our strategy to grow our presence in this high potential segment. At the same time, we are working on enhancing our market efforts to boost sales through our home delivery apps, aiming to reach more customers and improve overall performance. Mubadara program, which is subsegment of business to consumer, that is a government program we are doing for the mainly Qatari nationals and Ramadan and Adha, which has seen a steady revenue and the margins in this segment. In the other income, total amounting to QAR 19.4 million, of which QAR 19.2 million related to the reimbursement of costs by the State of Qatar for services provided to date on the slaughterhouses. The major portion of our cost is cost of sales of the meat itself, and Widam has been actively working with both local and international suppliers to ensure a reliable supply of high-quality products and competitive prices. But -- and by expanding this partnership, we are aiming to strengthen our supply chain and continuously improve our margins through better cost efficiency. Widam's general and administrative expenses for the first half of 2025 stood at QAR 31.1 million, marking a QAR 3.5 million reduction compared to the same period last year. This represents a 10% decrease, excluding the impact of provisions, and reflects the company's ongoing efforts to streamline operations and manage costs effectively. We are continuously managing our costs, maintaining them at a reasonable level or reducing them where possible. With regards to opportunities and challenges for 2025, the domestic market has been challenging post FIFA due to increased competition in the local market. However, Widam is continuously working on strategies to achieve growth in market share, revenues and margins. And Widam has already received a letter from the government awarding QAR 38.4 million as a compensation for the cost incurred by the company for service extended to the government for the year 2025 on the slaughterhouses. Additionally, as you are aware that Widam has received a letter -- winning letter on tender support for the red meat for the Ramadan and Adha, Mubadara for the next 3 years, which includes a national initiative, Mubadara will encourage local production and consumption. On the balance sheet side, the cash and bank balances decreased mainly due to repayment of borrowings and investing in working capital. And the Islamic borrowings decrease in borrowing position driven by repayment of outstanding facilities means Widam is trying to rely on the operational cash flow to run the operations. And the borrowings at this stage has gone down from QAR 93 million to QAR 30 million as at 30 June 2025. At this point, this is what I have to say. And please feel free to ask if you have any questions for me. Thank you.

[Operator Instructions] First question comes from the line of [ Adnan Mohsin ] with Al Rayan Investment.

This is [ Zohair ] from Al Rayan Investment. So I'm looking at your revenue segment, and fresh, frozen, chilled, each and every segment, except for slaughterhouse and miscellaneous, is lower for first half versus first half last year. So you said that the international business is not doing well, and that is one of the main reasons. Could you give us more color on that? Plus, locally, have you lost volumes or it is just pricing that is impacting yourself? So a little more details on that would be helpful.

Okay. Thanks for your question, [ Zohair ]. I would like to highlight on the international revenue that we were doing international business, which is a drop shipment, like we were supplying a meat directly from our supplier to our customers in the Middle Eastern countries plus Iraq and the Jordan as well. And the margins on these products were not lucrative, and we were -- the new Board and the new management is not satisfied with the margin that we are getting and the risk we are taking on these operations. Therefore, we have stopped the international business, it all. And then, we will keep exploring this international. It is not a complete shutdown, but temporary shutdown, and we are not doing currently any international business. But in future, we might go ahead with other supplier, where we can get the product, which is -- the quality product, which the international market can buy from us at a reasonable price and a good margin. So that is where the drop is in international revenue. From last year, it was around QAR 130 million in H1 2024, but this year, it is 0. That is one of the reasons in decline in the revenue. With regards to domestic business, yes, in domestic business, we have lost the volume as well as the revenue at the pricing because in current market in domestic, there is a tough competition from other local players, mainly the small players, where they are bringing the few containers into the local market and selling at the price, which is very competitive to Widam, and we are struggling with that. However, we -- being a strategic company for the country, we are still committed to supply meat at the reasonable price to the local market as well as maintaining our margin at the gross profit level and net profit level as well.

Okay. So what was the international margin that -- and international was both fresh and frozen or just -- or chilled or all 3?

No. International business was mainly frozen, like 90% to 95% was related to frozen that we were doing a drop shipment from India to other locations of Middle Eastern countries and Vietnam, Jordan, Iraq, these locations.

So what was the margin that was not lucrative? I mean, how much? Was it like negative?

See, see -- no, it was not negative. It was positive margin, but to fund this business, it was more of an advanced payment business to our supplier because they were relying on the funding from Widam only. And when we compare this funding to -- as an advance to a supplier, and then, get a collection from a customer with the time period of, let's say, 3 months lead time in this. And when we compare the financing cost that we are bearing on this advance, that -- comparison to that it is not lucrative.

So because you provide in advance, you have to fund that and that was not making -- the total transaction was not making money.

True. True.

Okay. Okay. And the fresh and the chilled decline is all related to local market?

Yes, yes, mostly.