L’azurde’s profits jump 167.3% during the third quarter to 24.6 ‎million riyals

L’azurde Jewelry Company revealed an increase in net profit after zakat and tax in the third quarter to 24.6 million riyals, compared to 9.2 million riyals in the same quarter of last year, by 167.3%. This came after today’s announcement of the preliminary financial results for the period ending on September 30, 2023. (Nine months).

Operating profit reached 26.5 million riyals in the third quarter, compared to 26.5 million riyals in the same quarter of the previous year.

Net profit after zakat and tax in the 9-month period amounted to 43.5 million riyals, compared to 31.4 million riyals in the same period last year, a growth of 38.5%.

Total shareholders’ equity (excluding minority rights) amounted to 374.2 million riyals in the current period, compared to 427.8 million riyals in the same period last year, a decrease of 12.5%.

Earnings per share in the current period reached 0.76 riyals, compared to 0.55 riyals in the same period last year.

– In the third quarter of 2023, L’azurde continued to provide strong and consistent performance since the start of implementing transformation initiatives in 2021/2022. This was reflected in achieving a net profit of 24.6 million Saudi riyals in the third quarter of 2023 AD, which is the seventh consecutive quarter in which the group achieved a net profit since the first quarter of 2022 AD.

The following factors mainly explain how net profit for the third quarter of 2023 was achieved:

‎1. The group’s total revenues, including the value of gold, amounted to 577.8 million riyals in the third quarter of 2023, an increase of 0.7% compared to 573.9 million riyals in the same quarter of last year. It is worth noting that the group does not realize profits or losses from selling gold as a metal

‎2. The group’s operating revenues, which better represent the group’s revenues after excluding the value of gold, amounted to 123.3 million Saudi riyals in the third quarter of 2023, a decrease of 9.6% compared to 136.4 million Saudi riyals in the same quarter of last year due to the translation of revenues. Egypt at a low exchange rate despite its significant increase in the pound

In Saudi Arabia, wholesale operating revenues increased by 1% over last year, while retail operating revenues grew by 2%, mainly due to growth in existing stores and improving the store network through opening new stores in better locations as part of the The group’s plan to improve and expand the scope of the retail network business in the Kingdom of Saudi Arabia

In Egypt, retail operating revenues grew by 27.5% in Egyptian pounds, but decreased by 21.0% after conversion to Saudi riyals due to the depreciation of the Egyptian pound, compared to the same quarter last year. However, due to the increase in sales prices to keep pace with the devaluation of the pound, the net profit of the retail sector in Egypt increased by 10% compared to the same quarter last year.

1. The group’s total profit of 83.7 million Saudi riyals in the third quarter of 2023 was slightly lower by 1.8% than the same quarter of last year, amounting to 85.2 million Saudi riyals due to the difference in the currency conversion rate.
2. The group’s operating expenses, amounting to 57.1 million Saudi riyals, decreased by 2.7% compared to the same quarter of last year, amounting to 58.7 million Saudi riyals due to cost control initiatives and the positive effects of the decline in the exchange rate of the Egyptian pound.
3. The group’s operating profits reached 26.5 million Saudi riyals for the third quarter of 2023, in line with the same quarter last year.
4. In July 2023, the Group, through one of its subsidiaries, L’azurde Dubai, sold an administrative office with a net book value of 5.3 million Saudi riyals to an external buyer for 16.4 million Saudi riyals. A profit of 10.1 million Saudi riyals was achieved in the third quarter of 2023, after deducting related expenses. This is in line with the group’s strategy to focus on productive assets, reduce costs, and provide the necessary liquidity for expansion.
5. Net profit in the third quarter of 2023 amounted to 24.6 million riyals, compared to 2.9 million riyals for the same quarter of last year. The increase in net profit includes profits of 10.1 million Saudi riyals from the sale of the administrative office in the United Arab Emirates.
6. The comprehensive income attributable to the company’s shareholders for the third quarter ending September 30, 2023 amounted to 6.6 million riyals, compared to comprehensive income of 2.5 million riyals in the same quarter of last year.

‎1. The group’s total revenues, including the value of gold, amounted to 577.8 million riyals in the third quarter of 2023, an increase of 20.9% compared to 477.8 million riyals in the second quarter of 2023.

‎2. Operating revenues of 123.3 million Saudi riyals for the third quarter of 2023 increased from the second quarter of 2023, amounting to 115.3 million Saudi riyals, by 6.9% due to the increase in sales prices.

1. Net profit amounted to 24.6 million Saudi riyals for the third quarter of 2023, compared to 7.2 million Saudi riyals for the second quarter of 2023. This is mainly due to an increase in operating profit by 7.8 million Saudi riyals and the profit from the sale of an administrative office in the United Arab Emirates. ‎

The following factors mainly explain how a net profit of 43.5 million Saudi riyals was achieved in the first nine months of 2023 (first nine months of 2022: 31.4 million Saudi riyals):

‎1. The group’s total revenues, including the value of gold, amounted to 1,552.0 million riyals for the current period of 2023, a decrease of 3.8% compared to 1,612.5 million riyals for the same period last year. It is worth noting that the group does not realize profits or losses from the value of selling gold as a metal

‎2. The group’s operating revenues, which better represent the group’s revenues after excluding the value of gold, amounted to 364.6 million Saudi riyals in the current period of 2023, a decrease of 10.0% compared to 405.3 million Saudi riyals in the same period last year due to the translation of revenues. Egypt at a low exchange rate

In Saudi Arabia, operating revenue from wholesale operations increased by 4.7% over last year due to strong sales of L’azurde Jewelery in traditional gold markets.‎

In Saudi Arabia, retail operating revenues increased by 4.3% over last year due to sales growth for existing stores and modernization of the store network by opening new stores in better locations.

In Egypt, retail operating revenues grew by 39% in Egyptian pounds, but decreased by 18% after conversion to Saudi riyals, compared to the same period last year. However, due to the increase in sales prices to keep pace with the devaluation of the pound, the net profit of the retail sector in Egypt increased by 16% compared to the same quarter last year.

1. The group’s total profit of 233.6 million Saudi riyals in the current period of 2023 decreased by 9.5% compared to the same period last year of 258.1 million Saudi riyals due to a decrease in operating revenues due to the decline in the exchange rate of the Egyptian pound, which is expected to be compensated with We continue to increase prices in Egyptian pounds
2. The group’s operating expenses, amounting to 163.2 million Saudi riyals, decreased by 12.5% compared to the same period last year, amounting to 186.6 million Saudi riyals, due to cost control initiatives and the positive effects of the decline in the exchange rate of the Egyptian pound.
3. The group’s operating profit of 70.4 million Saudi riyals for the current period of 2023 was slightly lower by 1.5% compared to 71.5 million Saudi riyals in the same period last year for the reasons mentioned above.
4. Net profit for the current period of 2023 amounted to 43.5 million Saudi riyals, compared to 31.4 million riyals for the same period last year, an increase of 38.5%, which includes a profit of 10.1 million Saudi riyals from the sale of the administrative office in the United Arab Emirates.
5. The comprehensive income attributable to the company’s shareholders for the current period amounted to 2.9 million Saudi riyals, compared to a loss of 10.6 million Saudi riyals in the same period last year.
6. Basic earnings per share reached 0.76 Saudi riyals in the current period of 2023, compared to 0.55 Saudi riyals for the same period last year.
7. Total shareholders’ equity on September 30, 2023 amounted to 374.2 million Saudi riyals, compared to 427.8 million Saudi riyals on September 30, 2022, a decrease of 12.5% as a result of dividend distributions, and the negative movement in the currency conversion reserve due to unrealized differences in foreign currencies on Investing in Egypt. It is worth noting that the currency translation reserve is a non-cash item that arises upon consolidation of the group’s financial statements only and is affected by fluctuations in foreign currency exchange rates.

– General comments:

The company successfully pursued its transformation plan in 2022 and 2023 and achieved consistently strong results quarter after quarter. In the future, the company will continue to benefit from the key innovations implemented over the past two years and introduce new growth initiatives. We are constantly looking for innovations and new initiatives to grow our top line, improve our gross margin, and operate with less working capital. We introduced a diverse portfolio of brands including L’azurde, TOUS and Miss’L as we strengthen and innovate our products to adapt and win in times of changing consumer shopping behaviours. We are also working to mitigate the short-term negative effects of the devaluation of the Egyptian pound by increasing our sales prices in Egyptian pounds, and launching new products that provide great value to consumers and provide us with strong profit margins.

The strategic drivers for the future success of the company consist of:

‎1. Expanding our fast-growing Miss’L fashion jewelry line to its full potential through our retail points of sale, e-commerce and other retailers.

‎2. ‎Growing L’azurde’s successful retail sector through new points of sale and better product assortment. Especially in the Kingdom of Saudi Arabia, we have a great opportunity to increase the size of L’azurde’s current retail network to a larger network with higher profitability, and to benefit from the reputation of the L’azurde brand with its history of more than 40 years. The company has succeeded in finding very promising new retail locations where stores will be opened in the near future.

1. Improving the traditional wholesale jewelry business by weight through a more profitable product mix, reduced working capital and lower costs.
2. Leveraging our strong customer network in the traditional gold jewelry market to expand more product lines and collections, resulting in increased revenues and profits.
3. Expand our fast-growing e-commerce business through further investments in technology, infrastructure and systems.
4. Expanding the business of the global TOUS brand in the Kingdom of Saudi Arabia through stronger assortments, new stores and more investments in marketing activities.
5. Developing new initiatives for growth across the GCC countries to benefit from the company’s capabilities in markets other than Egypt.
6. Strengthening our cash position while continuing to generate positive cash flows and enhancing our strong banking relationships to support the company’s transformation initiatives.‎

For further information, we would like to draw the attention of shareholders that the condensed consolidated financial statements for the period ending September 30, 2023 AD will be available on the company’s website (http://www.lazurde.com) under the Investor Relations section. ‎