Half year financial results
High double digit revenue growth
Driven by increased focus on industrial manufacturing
Doha, 1 August 2011 – the Board of Directors of Aamal Company QSC (“Aamal”), one of the GCC’s fastest growing diversified conglomerates, today announces the financial results for the half year ended 30 June 2011.
Financial Highlights
- Group revenue up 37.8% to QAR 781.2m (H1 2010: QAR 566.9m)
- Gross profit up 17.2% to QAR 209.6m (H1 2010: QAR 178.8m)
- Net profit* up 6.9% to QAR 117.2m (H1 2010: QAR 109.6m)
- Net margins (before share of profits of associates) decreased to 15.0% (H1 2010: 19.3%) due principally to a change in business mix with a greater focus on industrial manufacturing
- Low financial gearing** at 14.6% (31 December 2010: 11.2%)
- Reported and adjusted*** earnings per share up 5% to QAR 0.21 (H1 2010: QAR 0.20)
- Net investment in capital expenditure of QAR 20.9m (H1 2010: QAR 98.9m)
* Total net profit stated is after deduction of Head Office costs whilst net profit shown by division is before deduction of Head Office costs
** Net debt to net debt plus equity
*** EPS adjusted to show underlying profitability (i.e. excluding fair value gains on investment properties); also, in April 2011, Aamal issued and capitalised bonus shares so H1 2010 EPS has been adjusted accordingly (Company share capital increased to QAR 4.95bn from QAR 4.5bn)
H.E. Sheikh Faisal Bin Qassim Al Thani, Chairman of Aamal Company QSC, commented:
“It gives me great pleasure and satisfaction to report that the strong growth momentum of Aamal Company has been maintained with revenues increasing by nearly 38% and net profit by 6.9%. This very encouraging performance reflects the solid foundations laid to position the company for robust and sustainable growth as we seek to capitalise on the opportunities that are being created by the wider industrialisation of the Qatari economy.
“Aamal’s strategy is to create long-term shareholder value through the continued profitable operation and expansion of its diversified business platform, with an increasing focus on industrial manufacturing and related high growth sectors. For instance, shortly we will be commencing commercial production at our latest ready mix plant, the largest in the Middle East, increasing annual capacity to 600,000 cu m (from 374,000 cu m previously).
“This increased industrial focus is expected to be Aamal’s principal driver of growth, at least in the short to medium term. The Industrial Manufacturing division now makes up 51.3% of total revenue and 19.0% of net profit compared to 40.9% and 16.6% respectively for the corresponding period in 2010.
“It is also important that Aamal also continues to grow, diversify and innovate across other existing businesses to consolidate and enhance our long established market positions. In June, for instance, I was delighted to announce that Aamal established a new joint venture (“Johnson Controls Qatar”) with Johnson Controls, the global leader in its field, within its Managed Services division to provide facility improvement and energy solutions to customers in Qatar. This is a particularly exciting development for us as this JV will complement the Government’s goal to reduce Qatar’s carbon emissions and encourage the implementation of eco-friendly operations throughout Qatar and further afield. Furthermore, we believe that Johnson Controls Qatar has no direct competitors operating in Qatar. We will continue to focus on attracting such first class partnerships to enhance and grow our operations by being the partner of choice for leading multinationals in Qatar.
“Through this diversification, Aamal provides a well-balanced and comprehensive exposure to Qatar, one of the wealthiest and fastest growing economies in the world, with its companies well-positioned to identify and capture future growth opportunities. This strategic focus is supported by a strong operational focus on capital allocation, returns on capital and prudent management of the cost base.
“It is for the above reasons that I look forward to the future with every confidence that Aamal Company will continue to grow strongly and prosper.”
BREAKDOWN BY DIVISION
All Figures in QARm and before deduction of inter-divisional revenue and Head Office costs
REVENUE
| QAR m | H1 2011 | H1 2010 | Change % |
|---|---|---|---|
| Industrial Manufacturing | 401.0 | 231.6 | 73.1 |
| Trading and Distribution | 258.3 | 226.3 | 14.2 |
| Property | 105.7 | 99.3 | 6.4 |
| Managed Services | 23.3 | 17.8 | 31.2 |
NET PROFIT
| QAR m | H1 2011 | H1 2010 | Change % |
|---|---|---|---|
| Industrial Manufacturing | 22.2 | 18.2 | 22.4 |
| Trading and Distribution | 28.8 | 31.0 | (7.0) |
| Property | 83.4 | 73.5 | 13.4 |
| Managed Services | 5.0 | 4.4 | 13.6 |
DIVISIONAL REVIEW
INDUSTRIAL MANUFACTURING
Revenue
| QAR m | H1 2011 | H1 2010 | Change % |
|---|---|---|---|
| Senyar Industries* | 344.6 | 186.0 | 85.2 |
| Aamal Readymix | 46.2 | 41.8 | 10.5 |
| Aamal Cement | 10.2 | 3.8 | 170.7 |
| Advanced Pipes and Casts | – | – | – |
| IMO Qatar | – | – | – |
| TOTAL | 401.0 | 231.6 | 73.1 |
Net profit
| QAR m | H1 2011 | H1 2010 | Change % |
|---|---|---|---|
| Senyar Industries* | 20.1 | 15.7 | 28.1 |
| Aamal Readymix | 1.4 | 2.4 | (42.1) |
| Aamal Cement | 0.5 | 0.1 | 277.6 |
| Advanced Pipes and Casts | 0.3 | – | n/a |
| IMO Qatar | 0.0 | 0.0 | n/a |
| TOTAL | 22.2 | 18.2 | 22.4 |
* Senyar Industries is a 50:50 JV with Elsewedy Electric of Egypt. It has 3 main interests: Doha Cables (Senyar Industries Qatar has an 91.25% interest), Elsewedy Cables Qatar (Senyar has a 49% interest but overall management control) and Doha Transformers (expected to become operational in early 2012).
This division has seen significant growth in its revenue principally due to Doha Cables (which commenced production in May 2010) and growth at El Sewedy Cables Qatar.
Net profit margins for the division have fallen from 7.8% to 5.5%, mainly due to falls in net profit margins at both Senyar Industries and Aamal Readymix.
At Senyar Industries, finance costs were wholly expensed during the first half of 2011 unlike in 2010 when they were generally capitalised due to the start-up nature of the JV’s principal activities.
The ready mix concrete market in Qatar still continues to be very competitive with selling prices remaining under pressure. However, it is expected that these pressures will start to ease going forward as certain infrastructure projects that have been delayed are resumed and new projects associated with the 2030 National Vision come on-stream, boosted further by the award of the 2022 FIFA World Cup to Qatar. Aamal Readymix is well positioned to benefit from the anticipated improvement going forward as one of the strongest players in the sector. Furthermore, a fourth batching plant is shortly to become operational and will be the largest in The Middle East, taking total capacity from 374,000 cu m to 600,000 cu m.
Advanced Pipes & Cast Company has now received the building permit approval to commence the construction of the pipes factory in Mesaieed (85,000sq m) and operations are expected to start in early 2012.
TRADING AND DISTRIBUTION
Revenue
| QAR m | H1 2011 | H1 2010 | Change % |
|---|---|---|---|
| Aamal Trading | 62.9 | 54.1 | 16.3 |
| Aamal Medical | 62.3 | 68.4 | (9.0) |
| Ebn Sina Medical | 123.6 | 95.4 | 29.5 |
| Good Life Pharmacy | 5.8 | 4.8 | 21.1 |
| City Center Pharmacy | 1.2 | 1.1 | 12.6 |
| Foot Care Centre | 1.9 | 1.8 | 6.4 |
| Bottega Verde Qatar | 0.4 | 0.4 | 17.0 |
| Aamal Qatar Holding Company (Bahrain) | 0.2 | 0.3 | (9.5) |
| TOTAL | 258.3 | 226.3 | 14.2 |
Net profit
| QAR m | H1 2011 | H1 2010 | Change % |
|---|---|---|---|
| Aamal Trading | 8.9 | 7.4 | 20.2 |
| Aamal Medical | 12.6 | 15.1 | (16.3) |
| Ebn Sina Medical | 6.8 | 8.4 | (19.8) |
| Good Life Pharmacy | 1.2 | 0.8 | 56.9 |
| City Center Pharmacy | 0.0 | 0.0 | - |
| Foot Care Centre | 0.3 | 0.2 | 25.3 |
| Bottega Verde Qatar | (0.0) | (0.1) | 82.3 |
| Aamal Qatar Holding Company (Bahrain) | (0.9) | (0.6) | (36.2) |
| TOTAL | 28.9 | 31.0 | (7.0) |
The increase in revenue for the Trading and Distribution division has been driven by particularly strong performances from Aamal Trading and Ebn Sina Medical.
Aamal Trading continued to win a number of major tenders with the Qatari Government, semi-Government and private businesses, supported by a new strategy introduced in the fourth quarter of 2010 to deliver a more customer focused after-sales service.
Ebn Sina Medical saw a very significant rise in revenue, driven by the strong underlying growth of the Qatar pharmaceutical market and the retention and award of several exclusive distribution agreements with blue-chip international companies such as AstraZeneca, Novartis Pharma, Sanofi Aventis and Novo Nordisk.
Net profit margins across the whole division declined from 13.7% to 11.2%, principally due to a decline in net profit margins at Aamal Medical (due to timings of sales) and at Ebn Sina Medical (due to currency fluctuations).
PROPERTY
Revenue
| QAR m | H1 2011 | H1 2010 | Change % |
|---|---|---|---|
| City Center Doha | 79.3 | 77.2 | 2.6 |
| Aamal Real Estate | 26.4 | 22.1 | 19.6 |
| TOTAL | 105.7 | 99.3 | 6.4 |
Net profit
| QAR m | H1 2011 | H1 2010 | Change % |
|---|---|---|---|
| City Center Doha | 61.8 | 57.1 | 8.3 |
| Aamal Real Estate | 21.6 | 16.4 | 31.4 |
| TOTAL | 83.4 | 73.5 | 13.4 |
Occupancy at City Center Doha, which makes up 75% of this division’s revenues, has continued to remain high at 97%, with 3% strategically held back to allow for the active management of the centre. Paid parking is due to be introduced shortly and this is expected to enhance the attractiveness of the destination through the easing of congestion and an additional 7,000 sq m of retail space is scheduled to be added in Q1 2012.
Occupancy at Aamal Real Estate has also been high at 96%, with the newly completed upmarket Markhiya residential complex that was fully leased out from 1st April 2011 helping to account for the significant rise in both revenue and net profit.
Net profit margins have risen from 74.0% to 78.9% due to both an increase in lease rentals and the contribution from Markhiya.
MANAGED SERVICES
Revenue
| QAR m | H1 2011 | H1 2010 | Change % |
|---|---|---|---|
| Aamal Services | 17.4 | 16.6 | 4.9 |
| ECCO Gulf | 4.2 | - | n/a |
| Aamal Travel and Tourism | 1.7 | 1.2 | 42.8 |
| TOTAL | 23.3 | 17.8 | 31.2 |
Net profit
| QAR m | H1 2011 | H1 2010 | Change % |
|---|---|---|---|
| Aamal Services | 3.4 | 4.2 | (18.5) |
| ECCO Gulf | 1.0 | - | n/a |
| Aamal Travel and Tourism | 0.6 | 0.2 | 207.8 |
| TOTAL | 5.0 | 4.4 | 13.6 |
Revenues for Managed Services have increased due to the commencement of operations of ECCO Gulf in February 2010. ECCO Gulf has established a new call centre with capacity for 100 contact centre seats with the potential for expansion up to 500.
Net profit margins have fallen from 24.8% to 21.5% due primarily to Aamal Services making the strategic decision to expand into lower margin activities and thereby enhancing its offering by becoming a first point of call for a wider range of clients. Illustrating this move, Aamal Services was successful in negotiating a contract with Qatari Diar during the period.
SUMMARY AND OUTLOOK
H.E. Sheikh Mohamed Bin Faisal Al Thani, Vice-Chairman of Aamal, commented:
“We are very pleased with the way that Aamal has performed over the first half of this year. What has been particularly gratifying is the excellent set of results from the Industrial Manufacturing division as this is an area that Aamal has increased its exposure to over the last 12-18 months in order to capitalise on the next stage in Qatar’s industrial development. Consequently, we continue to remain very confident about the outlook for Aamal.”
Tarek M. El Sayed, Managing Director of Aamal, commented:
“The first six months of 2011 has seen Aamal Company continue to grow and consolidate its market leading positions across a whole range of business areas. In particular, the Industrial Manufacturing division, which now makes up over half of our revenues and is expected to be the main driver for growth going forward, has performed well with the new business lines launched during the first half of 2010 meeting our original expectations.
“Aamal Company, through its diversified business model, is well positioned to capture the significant opportunities afforded by the rapidly growing and developing Qatari economy, underpinned by the National Vision 2030 strategy and of course the award of the 2022 FIFA World Cup. It is for this reason that we remain upbeat on the overall the trading outlook and positive about the Company’s future prospects.”
Further enquiries:
| Aamal Company | |
|---|---|
| Arwa Goussous, Corporate Communications Manager | + 974 5513 9539 |
| Citigate Dewe Rogerson | |
| Seb Hoyle / Nick Cox-Johnson | +974 452 8335 |
| Ayman Hammamieh / Habib Bacha (for Arabic media) | +971 (0)2 401 2612 |
PLEASE NOTE: A video webcast of Aamal Company management presenting the 2011 Half Year Results is available for equity analysts and investors to download from the Investor Relations section of the Aamal Company website:
http://www.axisto.com/webcasting/investis/aamal/half-year-results-2011/
Overview of Aamal
Aamal Company is one of the GCC’s fastest growing diversified conglomerates, delivering a CAGR in operating profit of 23% from 2006-2010 and generating revenues of QAR 1,217m (US $334m) in 2010. Focused on sustained, profitable growth and strongly diversified for balanced exposure across Qatar’s rapidly growing economy, Aamal’s operations comprise 23 business units with market leading positions in the key industrial, retail, property, managed services and medical equipment and pharmaceutical sectors. Aamal is one of the largest diversified companies quoted on the Qatar Exchange, having been listed since December 2007.
For further information on Aamal Company, please refer to the corporate website: http://www.aamal.com.qa
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