Posted on July 31, 2017

The Board of Directors of Aamal Company Q.P.S.C. (“Aamal”), one of the Gulf’s fastest growing diversified companies, today announces its financial results for the half year ended 30 June 2017

Financial Highlights

  • Group revenue down 30% to QAR 974.5m, primarily due to loss of control of two subsidiaries (H1 2016: QAR 1.39bn)
  • Gross profit down 13.8% to QAR 306.2m (H1 2016: QAR 355.3m)
  • Total net profit1 down 12.8% to QAR 266.6m (H1 2016: QAR 305.5m)
  • Net underlying profit margins2 of 24.8% (H1 2016: 19.5%)
  • Profit attributable to Equity Holders down 6% to QAR 240.3 (H1 2016: QAR 255.6)
  • Reported earnings per share down 7.3% at QAR 0.38 (H1 2016: QAR 0.41)
  • Net investment in capital expenditure of QAR 50.8m (H1 2016: QAR 60.1m), primarily in Aamal’s Property division
  • Net positive cash QAR ‎135m (31 December 2016: net financial gearing of 2.3%3)

1 Total net profit is stated before the deduction of non-controlling interests

2 Excluding share of profit from equity accounted for investments in associates and joint ventures

3 Net debt to net debt plus total equity

(N.B. there may be slight differences due to rounding)

H.E. Sheikh Faisal Bin Qassim Al Thani, Chairman of Aamal Company Q.P.S.C., commented: “The first six months of 2017 saw a fall in revenue and profits compared to the first half of the previous year.  This was the result of a variety of factors including ongoing redevelopment work at City Centre Doha and several one-off contracts being awarded in 2016, as well as loss of control of two subsidiaries in our Industrial Manufacturing division which have affected the presentation of our financials and comparison with the first six months of 2016.

“Aamal Company continues to enjoy a healthy financial position, our businesses remain at the forefront of their respective sectors in Qatar and we are well-placed to absorb the short-term impact of these factors.  We are currently re-evaluating our supply chain processes and examining several new business opportunities, particularly in our Industrial Manufacturing division, initiatives which we are confident will help contribute to Aamal’s future growth.”

BREAKDOWN BY DIVISION

(N.B. there may be slight differences due to rounding)

REVENUE

QAR m

H1 2017

H1 2016

Change

Industrial Manufacturing

477.3

843.7

(43.4)%

Trading and Distribution

308.9

354.0

(12.8)%

Property

153.6

164.0

(6.3)%

Managed Services

48.1

47.0

2.3%

less: inter-divisional revenue

(13.3)

(19.7)

(32.5)%

TOTAL

974.6

1,389.1

(30.0)%

NET PROFIT

QAR m

H1 2017

H1 2016

Change

Industrial Manufacturing

72.9

117.0

(37.7)%

Trading and Distribution

59.6

68.2

(12.6)%

Property

127.1

135.5

(6.2)%

Managed Services

3.1

4.7

(34.3)%

Head Office

3.9

(19.9)

n/a

TOTAL

266.6

305.5

(12.8)%

DIVISIONAL REVIEW

(N.B. there may be slight differences due to rounding)

INDUSTRIAL MANUFACTURING

QAR m

H1 2017

H1 2016

Change

Revenue

477.3

843.7

(43.4)%

Net profit

72.9

117.0

(37.7)%

Made up of:

 

 

 

Net profit: fully consolidated activities

50.8

85.5

(40.6)%

Net profit: share of equity accounted for investee net profits

22.1

31.5

(29.9)%

Net underlying profit margin %

(i.e. excluding share of equity accounted investee profits)

10.7%

10.1%

       0.51 ppts

Overall revenues for Industrial Manufacturing fell by 43.4% and overall net profit by 37.7%, although the net underlying profit margin increased marginally.  The division was affected by accounting treatment changes due to loss of control of Senyar Industries and Advanced Pipes and Casts Company, both of which became accounted for as joint ventures from 1 April 2017 having both previously been consolidated. Additionally, some subsidiaries in this division have seen increased market competition which has led to them to offering competitively lower sales prices.

TRADING AND DISTRIBUTION

QAR m

H1 2017

H1 2016

Change

Revenue

308.9

354.0

(12.8)%

Net profit

59.6

68.2

(12.6)%

Net profit margin %

19.3%

19.3%

-

In our Trading and Distribution division, revenue fell by 12.8% and profit by 12.6%.  This was primarily due to a fall in net profits at one of the division’s subsidiaries which had benefited in 2016 from winning and completing several one-off contracts which, as expected, were not repeated in the first half of 2017. 

PROPERTY

QAR m

H1 2017

H1 2016

Change

Revenue

153.6

164.0

(6.3)%

Net profit

127.1

135.5

(6.2)%

Made up of:

 

 

 

Net profit: fully consolidated activities

124.1

132.1

(6.0)%

Net profit: share of equity accounted for investee net profits

3.0

3.4

(11.8)%

Net underlying profit margin %

(i.e. excluding share of equity accounted investee profits)

80.8%

80.5%

0.3 ppts

Although Aamal Real Estate saw a slight increase in net profit, our Property division was impacted by the ongoing expansion and redevelopment of City Center Doha, one of the leading shopping malls in Qatar.  While this work remains on track for completion in 2018, it inevitably had an impact on profitability as some spaces available for retail remain under development. During the period, Aamal Real Estate began the construction of a residential building containing 64 apartments which is also expected to be completed in 2018.

MANAGED SERVICES

QAR m

H1 2017

H1 2016

Change

Revenue

48.1

47.0

2.3%

Net profit

3.1

4.7

(34.3)%

Net profit margin %

6.4%

10.0%

(3.6) ppts

While revenues grew by 2.3%, the fall in net profit was mainly due to changes in consumer behaviour during the holy month of Ramadan, impacting our subsidiaries involved in providing travel and entertainment services.

SUMMARY AND OUTLOOK

H.E. Sheikh Mohamed Bin Faisal Al Thani, Vice-Chairman and Managing Director of Aamal, commented: “Although our financial results for the first half of 2017 are less impressive than those which we reported a year ago, Aamal Company remains well-placed to take advantage of growth opportunities as they arise. “We continue to hold market-leading positions across our diverse range of businesses and our business model and financial position, including our healthy cash flow generation, remain strong.  I look forward with confidence to the remainder of this year and beyond.”

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