Publisher: Maaal International Media Company
License: 465734
Bin Dawood Holding Company recorded a net loss after zakat and tax in the third quarter of SR48 million, compared to a profit of SR70.2 million in the same quarter of last year.
This came following the announcement on Tuesday of the consolidated interim condensed financial results for the period ending on September 30, 2022 (nine months).
The operational loss amounted to SR26.5 million in the third quarter, compared to a profit of SR95.4 million in the same quarter of the previous year.
The net profit after zakat and tax in the 9-month period amounted to SR59.7 million, compared to SR227.3 million in the same period last year, a decline of 73.7%.
The gross shareholders’ equity “without minority rights” amounted to SR1.28 million in the current period, compared to SR1.39 million in the same period last year, a decrease of 8%.
Profits per share in the current period reached SR0.52, compared to SR1.99 in the same period last year.
The reason for the increase (decrease) in the net profit during the current quarter compared to the same quarter of the last year is:
Revenue for the third quarter was SR1,182.5 million, 9.7% higher than Q3 2021, as a result of the Company’s continued marketing and promotions activity.
The increase in the third quarter’s revenues is directly attributable to BinDawood stores sales coupled with contributions of overseas subsidiary, Ykone. Increase in BinDawood stores’ revenues was witnessed across the full store’s portfolio and not just confined to the stores serving the pilgrims. However, Danube stores’ revenues declined mainly because of lower sales volume to corporate customers.
The third quarter’s gross profit was SR307.2 million equivalent to 26% of sales revenue compared to SR397.3 million equivalent to 36.9% of sales revenues in Q3 2021. The decline in gross profit was led by the marketing and promotions activity and the realigning of our supplier support income (supplier terms).
The third quarter’s operating expenses were SR336.5 million, compared to SR304.1 million in Q3 2021, as a result of higher employment costs, acquisition-related costs and higher bank charges as more customers reverted to paying using credit cards during this quarter.
The third quarter’s net loss was SR48 million versus a net profit of SR70.2 million in Q3 2021, which reflects the cumulative impact of lower gross margin and higher operating expenses.
The reason for the increase (decrease) in the net profit during the current quarter compared to the previous quarter of the current year is:
The decline in Revenue by 3.1% in Q3 2022 compared to Q2 2022 is mainly due to a drop in sales of Bindawood stores owing to a fall of the full-fledged Ramadan season in Q2 2022. Moreover, the limited Hajj season attracted less than anticipated consumer footfall, coupled with the fact that ritual days fall between late Q2’22 and early Q3’22 as a consequence of which a declining trend is witnessed in Q3’22.
The decrease in gross profit is directly attributable to a decline in revenues. Further, the decline in gross profit was led by the marketing and promotions activity, and the realigning of our supplier support income (supplier terms).
Operational expenses increased by 6.7% from SR315.3 million to SR336.5 million due to an increase in acquisition-related costs and the impact of the cost associated with the new store opening during Q3 2022.
Net Profit dropped by 213.4% in Q3 2022 versus Q2 2022 mainly due to a significant drop in gross margin and an increase in operating expenses as mentioned above.
The reason for the increase (decrease) in the net profit during the current period compared to the same period of the last year is:
Revenues increased by 7.6% to SR3,578.7 million compared to SR3,325 million for the same period last year. The increase in sales revenues was mainly driven by BinDawood stores’ sales, which were 27.6% higher in the first nine months of 2022 compared to the same period in 2021. The return of the pilgrims, spurred by the lifting of the travel ban and the return of promotions and marketing activities during Hajj, Umrah and Back to School seasons helped lift sales across all BinDawood stores and not just those serving pilgrims. Danube sales were slower mainly due to a slow-down in sales related to corporate customers.
Gross profit was SR1,069 million or 29.9% of sales revenues during the period ended September 2022 compared to SR1,170.1 million or 35.2% of sales revenues during the same period of 2021. The reduction in gross profit is directly attributable to the third quarter’s decreased gross profit led by the marketing and promotions activity, and the realigning of our supplier support income (supplier terms).
Operational expenses were SR964.6 million versus SR877.1 million in 9M 2021, reflecting higher employment costs, expenses associated with new store openings, as well as acquisition-related costs.
The net profit was SR59.8 million compared to SR227.3 million in 9M 2021, representing a net profit margin of 1.7% and 6.8% respectively. The strong sales performance in 9M 2022 was unable to offset the reduction in gross margin and higher operating expenses, particularly during the loss-making third quarter, resulting in a much smaller net profit year-to-date.
No comparative figures for the previous period have been reclassified.
General comments:
During the third quarter, the Company completed the acquisition of an 80.5% stake in France-based marketing agency Ykone through its wholly-owned subsidiary Future Technology Retail (FTR). Ykone’s performance since the date of acquisition has been much better than expected and the financials will be reflected in the full-year results.
Significant movements in the Statement of Financial Position as at 30th September 2022 (for the nine-month period) were noted as follows:
1. Non-current assets increased by 2.4% resulting from goodwill on the acquisition of Ykone and International Application Trading Company “IATC”.
2. Current assets increased by 4.7% on account of a decrease in receivables balances owing to timely recovery from VIP customers which was offset against an increase in inventory and prepayments & advances.
3. Current liabilities increased by 36% resulting from an incline in trade payables due to increased purchases in order to meet the potential surge in demand for stores serving the pilgrims and Back to School seasons.
4. Non-current liabilities were decreased by 4.0% on account of net payments made against lease liabilities.
5. Gross shareholders’ equity (after deducting minority equity) decreased by 7.9% driven by a net decrease in retained earnings after the distribution of dividends in q3 and reporting net loss in the third quarter of the current year.