Nahdi Medical profit slides 4.3% in 2021

Nahdi Medical Co. announced that its profits after zakat and tax fell 4.3% to SR 812.5 million during the year of 2021 compared to SR 849.1 million in 2020.

The Saudi company added in its financial result statement published on Tadawul that operational profit declined by 4.1% to SR 919.6 million from SR 958.7 million, while gross profit surged 1.7% to SR 3.304 billion from SR 3.249 billion.

Profit per share (EPS) also soared to SR 6.25 from SR 6.53.

The company attributed lower profit the following:

 (1) Revenues: Revenue declined by 6.7% for the year 2021 reaching SAR 8,066.2 Million, with a decrease of SAR 576.0 Million compared to SAR 8,642.2 Million in the previous year as a result of high sales base in 2020 due to the historical stock piling consumer behavior during COVID.

 (2) Gross Profit: Gross Profit increased by 1.7% for the year 2021 reaching SAR 3,304.7 Million, with an increase of SAR 55.0 Million compared to SAR 3,249.7 Million in the previous year, with an improved gross margin by 3.4% reaching 41.0% of revenue compared to 37.6% for the previous year. Gross Profit improvement was driven by the reclassification of cost of operated pharmacies from cost of revenue to selling and distribution expenses +2.7%, a positive product mix +2.4%, and the reversal of inventory provision related to Corona items such as Masks +4.9% (the reversal is a result of Nahdi’s ability to sell Personal Protective Items at a higher turnover than expected). That was partially offset by the decrease in profit as a result of the decline in sales -8.2%.

 (3) Operating Expenses: Total operating expenses for Year 2021 increased by 5.7% reaching SAR 2,456.8M Million, with an increase of SAR 132.2 Million compared to SAR 2,324.6Million in the previous year. The increase in total operating expenses is due mainly to the reclassification of cost of operated pharmacies from cost of revenue to selling and distribution expenses.

 (4) Net Profit for the Year: Profit for the year 2021 decreased by 4.3% reaching SAR 812.5 Million, with a decrease of SAR 36.6 Million compared to SAR 849.1 Million in the previous year, while profit margin improved by 0.25% reaching 10.1% of revenue compared to 9.8% for the previous year. The Net Profit for the year decrease was driven by the decline in revenues (as explained above). The impact of the decline in revenue was partially offset by the favorable product mix and reversal of inventory provision for Corona related items. Additionally, Profit for the year was positively impacted by one-off non-recurring items which amount to SAR 60 Million related to the reversal of provision for operated pharmacies, other provisions and adjustment related to IFRS-15 for Loyalty accruals.