Zamil Industrial records losses of SAR 33.1 million during Q3

Zamil Industrial Investment Company recorded a net loss after zakat and tax in the third quarter of SAR 33.1 million, compared to a profit of SAR 2.4 million in the same quarter of last year. This came after the announcement on Sunday of the interim financial results for the period ending September 30, 2023 (nine months).

The operational profit reached SAR 663 thousand in the third quarter, compared to SAR 33.5 million in the same quarter of the previous year, a decrease of 98%.

The net loss after zakat and tax in the 9-month period amounted to SAR 231 million, compared to SAR 78.4 million in the same period last year, an increase of 194.4%.

The total shareholders’ equity (excluding minority rights) amounted to SAR 530.3 million in the current period, compared to SAR 870.7 million in the same period last year, a decline of 39%.

The loss per share in the current period reached SAR 3.85, compared to SAR 1.35 in the same period last year.

Net loss increased due to:

1) Higher Financial Charges by SAR 20.1 million;

2) Higher Provision for Zakat and Tax by SAR 6.2 million;

3) Higher Provision for Expected Credit Loss by SAR 18.8 million.

However, the impact of the above is partly offset by the following:

1) Higher Sales in the Steel and Insulation sectors;

2) Higher Gross Profit and Operating Profit in the Steel and Insulation sectors.

Net loss reduced due to:

1) Higher Sales across all sectors;

2) Higher Gross Profit across all sectors;

3) Better Operating margins in the AC sector;

4) Higher Other Income by SAR 9.8 million;

5) Higher Share in results of associates and a joint venture by SAR 8.1 million;

6) There is no extraordinary provision compared to SAR 162.8 million inventory provision against loss due to fire made in the previous period of the current year.

Net loss increased due to:

1) Inventory Provision of SAR 162.8 million damaged due to fire;

2) Higher Financial Charges by SAR 69.2 million;

3) Higher Provision for Zakat and Tax by SAR 14.3 million;

4) Higher Provision for Expected Credit Loss by SAR 29.3 million;

5) Impairment loss of non-current assets by SAR 8.2 million.

However, the impact of the above is partly offset by the following:

1) Higher Sales across all sectors;

2) Better Gross Profit margin in the Steel and Insulation sectors;

3) Better Operating margins in the Steel and Insulation sectors;

4) Higher Profit from Discontinued Operations by SAR 43 million;

5) Higher Share in results of associates and a joint venture by SAR 16.8 million.

It is worth mentioning the following important notes:

1. Consolidated Sales during the period increased across all sectors by 18.3% (AC = 5.8%, Steel = 24.5%, and Insulation = 48.5%).

2. Operating Profit during the period, excluding extraordinary provisions, was SAR 29.5 million compared to a profit of SAR 3.7 million.

3. During the period, the company made a provision amounting to SAR 162.8 million for inventories that were damaged during the fire incident that occurred in one of the plants of Zamil Air Conditioners and Home Appliances Company (a subsidiary) back on 3 March 2023. The company has insurance coverage to mitigate the risk of such losses. The company has filed claims and is confident that the settlement from the insurance company will be adequate to cover the losses due to the fire.

4. During the period, company’s Extraordinary General Assembly, held on 28 September 2023, approved the recommendation of the Board of Directors to use a portion of the statutory reserve of SAR 180,000,000 to absorb the company’s total accumulated losses of SAR 169,253,000, representing 28.2% of the capital as on 30 June 2023.

As a result, the accumulated losses as on 30 September 2023 amounted to SAR 33.1 million, which represents 5.53% of the capital.