Shaker reports profit surge of 48% to SR14.5 mln in 1Q

Al Hassan Ghazi Ibrahim Shaker Co. announced that its profits after zakat and tax rose 48% to SR 14.5 million in the first quarter of 2022 compared to 9.8 million during the same period of 2021.

This came after Shaker announcement on Monday of the preliminary financial results for the period ending on 31.03.2022 (three months).

The company’s operational profit jumped 77% to SR 16 million in the 1^st quarter of the current year from SR 9 million in the same period of the previous year.

Shaker recorded gross profit increase of 35% to SR 78 million in the first quarter of this year from gross losses of SR 58 million a year ago, while the profit per share soared to SR 0.62 from SR 0.34.

Al Hassan Ghazi Ibrahim Shaker Co. (“Shaker”) achieved a net profit of SAR 14.5 million in Q1 2022, a 47.9% increase from SAR 9.8 million in Q1 2021, as a result of the following:

Revenues:

Q1 2022 vs Q1 2021

• Shaker’s revenues recorded an 11.0% quarter on quarter (QoQ) growth from SAR 288.3 million in Q1 2021 to SAR 319.9 million in Q1 2022. The increase in Shaker’s revenue was mainly driven by the Group’s accelerated return to growth and profitability which was sustained for the 7th consecutive quarter.

Gross Profit:

Q1 2022 vs Q1 2021

• Gross profit increased by 34.7% (QoQ) from SAR 57.6 million in Q1 2021 to SAR 77.6 million in Q1 2022, driven by the increase in revenues.

Net Profit

Shaker delivered a significant 47.9% increase in net profit, recording SAR 14.5 million in Q1 2022, compared to SAR 9.8 million in Q1 2021. This reflects the substantial rise in revenues and operating profit resulting from the Group’s focus on top-line growth acceleration along with cost efficiencies.

Share in profit from associates decreased by 25.3% from 8,423 SAR to 6,294 SAR reason being re-statement of Q1 2021 financials.

Revenues:

Q1 2022 vs Q4 2021

• Additionally, revenues grew from SAR 247.8 million in Q4 2021 to SAR 319.9 million in Q1 2022 showing accelerated top-line growth of 29.1%.

Gross Profit:

Q1 2022 vs Q4 2021

• Cost efficiencies were sustained with 31% rise in Gross Profit from the previous quarter (Q4 2021).

Net Profit:

Al Hassan Ghazi Ibrahim Shaker Co. (“Shaker”) achieved a net profit of SAR 14.5 million in Q1 2022 an increase from SAR 0.3 million in Q4 2021, mainly due to provision for zakat impacted in Q4 2021.

Additional Information   The Board of Directors, on December 16, 2021, recommended a capital decrease of SAR 147.77 million, with a subsequent increase through issuance of rights shares for SAR 249 million. This decrease has received both the regulatory and shareholder approvals and the company will proceed with the next steps in this process.

Certain amounts in the comparative periods have been corrected and, accordingly, restated in the condensed consolidated interim statement of financial position as of December 31, 2020 and 1 January 2021, and in the condensed consolidated interim statements of profit or loss and other comprehensive income for the prior periods as explained below:

1. The unrealized profit on upstream transactions between the Company and its associate were not eliminated in prior years. Therefore, the investment in associate and share of profit from the associate balances have been corrected retrospectively.
2. Included within trade receivables was a receivable balance amounting to SAR 28.64 million in relation to advisory services offered by one of the Group’s subsidiaries. Based on the memorandum of understanding between the subsidiary and its customer, the fees were contingent in nature. Further, the probability of realizability of these fees was low and did not meet the recognition criteria. Therefore, the revenue and the related receivable balance should not have been recognized in the previous financial years. These balances are corrected retrospectively and the related expected credit loss of SR 7 million, which was restated in the condensed consolidated interim statement of profit or loss and other comprehensive income for the three-month period ended March 31, 2021.
3. The presentation of the statement of financial position is changed retrospectively for better understanding and presentation by segregating prepayments and other debt balances from trade receivables. The effects are the reclassification of SR 4.2 million as of December 31, 2020 (January 1, 2021: SAR 3.5 million) from trade receivables to prepayments and other debt balances.

The total cashflows from operating, investing, and financing activities were not affected because of these restatements. The effects of the restatements in the statement of cash flows are primarily in adjustments for non-cash items and changes in working capital within cash flows from operating activities and hence, are not disclosed separately.

Shaker achieved revenue of SAR 319.9 million, growing by 11.0% QoQ as compared to Q1 2021. Gross profit increased 34.7% QoQ to SAR 77.6 million. Shaker’s Q1 2022 net profit significantly increased to SAR 14.5 million up from SAR 9.8 million in Q1 2021.

The accumulated losses to capital ratio decreased from 23.5% in 2021

to 21.3% in 2022 following the re-statement of financials of the previous year. In this instance, the CMA’s rules and regulations for listed companies with total accumulated losses of 20% or more of capital will be applied.

Earnings / (Loss) calculation per Share for Q1 2022:

(All figures are in (Thousands) Saudi Arabia Riyals)

Profit for Q1 2022 (A): SAR 14,474

Less Non-Controlling interests: SAR (287)

Profit attributable to owners of the company: SAR 14,761

Number of shares (B): 63,000

Profit per share (calculated (A) divided by (B)): SAR 0.23

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Earnings / (Loss) calculation per Share for Q1 2021 (restated):

(All figures are in (Thousands) Saudi Arabia Riyals)

Profit for Q1 2021 (A): SAR 9,784

Less Non-Controlling interests: SAR 76

Profit attributable to owners of the company: SAR 9,708

Number of shares (B): 63,000

Profit per share (calculated (A) divided by (B)): SAR 0.15

Outlook and strategy

Shaker’s expansion strategy focuses on growing its market share and product mix while enhancing organizational and operational efficiencies. The Group will continue to explore possible brands and products acquisitions that complement the existing revenue streams as well as further pursue its goal of becoming the preferred choice for partners and customers in the Saudi consumer electronics and home appliances sector, while strengthening its leading manufacturing and sales position in the air-conditioning sector.

Significant growth opportunities in air-conditioning and energy efficiency lie ahead as the Saudi economy expands, including from megaprojects such as Neom, Amaala and Red Sea Development, together with government energy efficiency programs such as the Saudi Energy Efficiency Center’s high-efficiency AC initiative, and Tarsheed, the National Energy Services Company.