Lazurde turns to profit in 2022

Lazurde Company for Jewelry has turned to net profit of SR 22 million in 2021 compared to losses of SR 120.5 million during the same period of 2020.

Lazurde also turned to operational profits of SR 82 million last year from operational loss of SR 59 million the year earlier, while gross profits surged 68% to Sr 308 million from SR 183 million. Earnings per share (EPS) stood at SR 0.44 from losses per share at SR 2.8.

In 2021, operational revenue was higher by 45.5% compared to 2020, contributed by all sales channels and geographies. This was reflected in achieving a net profit of SR 22.0 million in 2021 compared to a loss of SR 120.5 million in 2020.

Turning to profits was mainly driven by:

1. Group total revenues, including gold metal value, were SR 1,971.5 million in 2021, an increase of 54.2% compared to SR 1,278.4 million in the last year. It is worth noting that the Group does not make profits or losses from sales of gold as a metal.
2. Group operating revenues, which better represent revenues of the Group after excluding gold metal value, amounted to SR 505.3 million for the current year, an increase of 45.5% compared to SR 347.4 million in the last year contributed by all channels and geographies

In KSA, retail revenues significantly increased by 20.9% compared to last year. This was attributable to the growth of revenues in same shops, growth in Miss L’ and L’azurde Instyle brands, the fast growing L’azurde e-commerce platforms, the opening of new outlets in the last twelve months and easing of COVID-19 precautionary measures partially reduced by decline in sales in airports.

In Egypt, retail operating revenues impressively increased by 38.9% compared to last year, attributable to the growth of revenues in same shops, the opening of new outlets in the last twelve months, growth in Miss L’ and L’azurde Instyle brands, the fast growing L’azurde e-commerce platforms and easing of COVID-19 related precautionary measures.

In KSA, wholesale operating revenues were 60.0% higher than last year as 2020 was significantly affected by closure of gold souks and malls, in addition to the successful launch of L’azurde Instyle selling fashionable and affordable jewelry by piece in traditional gold souks.

In Egypt, wholesale operating revenues impressively grew by 64.1% compared to last year as the demand for L’azurde gold jewelry continues to remain very high in Egypt and the advertising campaigns are having a positive impact on demand.

Group launched the e-commerce business last year, which has delivered SAR 24.3 million revenues in the year 2021 (2020: SR 6.2 million). This represents a solid promising share of 4.8% of total Group operating revenues and 10.8% of Group Retail revenues in current year (2020: represented 1.8% of Group operating revenues and 3.5% of Group Retail revenues).

Miss L’ and L’azurde Instyle brands, which were launched two years and one year back respectively, have performed very well also and have together contributed SR 106.3 million revenues in 2021 which represents 21.0% of Group operating revenues (2020: represented 13.8% of Group operating revenues), which signifies the Group’s ability to generate new revenue streams from new brands with different offerings.

Group gross profit of SR 307.7 million for year 2021 was 68.1% higher than last year’s Group gross profit of SR 183.0 million due to higher operating revenues. Also, the Gross margin % significantly improved to 60.9% in current year compared to 52.7% in 2020. This reflects the Group’s ability to defend and grow its profitability margins while growing its revenues as well.

1. Group operating expenses as % of operating revenues were reduced to 45% in 2021 when compared to 70% in 2020, due to cost control initiatives and higher revenues.
2. Group operating profit of SR 81.5 million for year 2021 was higher compared to Group operating loss of SR 58.6 million due to higher revenues and higher gross margin.
3. All the strategic and commercial initiatives taken by the Company in the last year, including the optimization of its gold working capital and the rights issue in June 2021, have resulted in a significant reduction in finance costs. Group finance costs in 2021 were SR 31.2 million, a substantial reduction of 38.1% over SR 50.4 million of finance costs in last year.
4. Net profit for 2021 amounted to SR 22.0 million compared to net loss of SR 120.5 million in the last year due to reasons stated above. This is a huge transformation turnaround in profitability of SR 142.5 million compared to last year reflecting all the strong and swift measures the Group has undertaken to get out stronger from the COVID crisis.
5. For the year 2021, Comprehensive income attributable to shareholders of the Company amounted to SR 19.6 million compared to Comprehensive loss of SR 118.6 million in the last year.
6. Total Shareholders’ Equity at 31 December 2021 was SAR 454.2 million compared to SR 297.3 million at 31 December 2020, an increase of 52.8%, due to increase in share capital after the Rights issue completed in June 2021 and current year’s profitability.
7. The Group has managed to generate a positive cash inflow from operations of SR 78.1 million in the current year compared to SR 58.7 million in last year, an increase of 33.1%. During 2021, the Group has fully repaid all its cash short-term and long-term facilities and continues to have large unutilized bank cash facilities.
8. On 30 June 2021, the Company completed all regulatory requirements related to the capital increase of SR 145 million by way of rights issue. After rights issue, the Company’s share capital increased to SR 575 million. SR 105 million of the proceeds of the share capital increase was used to reduce the company’s debt, retail expansion and e-commerce development as planned. The share capital increase has significantly strengthened Group’s financial position.