Wednesday 09, August 2017 by Jessica Combes

Mezzan Holding reports H1 2017 financial results

 

Mezzan Holding KSC, one of the largest manufacturers and distributors of food, beverage, FMCG and pharmaceutical products in the Gulf, has announced the company’s financial results for Q2 2017.

 

The company reported KD50.3 million in Q2 revenue, and a Q2 net profit of KD2.0 million. The quarter’s results bring Mezzan Holding’s H1 revenue to KD107.8 million, down slightly by 0.6 per cent from the same period last year, and bring H1 net profit to KD7.3 million, down 26.7 per cent from the same period last year.

 

“We are pleased to announce to our shareholders that this is our ninth quarter of consecutive profitability since our listing on Boursa Kuwait and despite the challenging dynamic of our region. Though we had a drop in profitability due to these factors, our balance sheet and cash positions continue to be strong and ahead of our regional peers while our diversified business model, which is very unique to Mezzan, has proven once again to be our biggest asset,” said Mezzan Holding Executive Vice Chairman, Mohammed Jassim Al Wazzan.

 

Mezzan Holding CEO, Garrett Walsh, added that Q2 proved to be a quarter that had both opportunities and some internal and external challenges that were a drag on profitability. “Some of the challenges were addressed while others were beyond our control or influence. With that said, the defensive nature of our business model helped us maintain our revenue level and our continued profitability. Looking forward, we are working to offset external challenges by maximising internal opportunities. New synergies are being identified in logistics to lessen the impact of similar situations in the quarters to come and to return to growing our profitability.”

 

Financial Highlights

Revenue:

Q2’17: KD50.3 million, down 4.8 per cent, compared to Q2 2016

H1’17: KD107.8 million, down 0.6 per cent compared to H1 2016

EBITDA:

Q2’17: KD4.0 million, down 40.6 per cent compared to Q2 2016

H1’17: KD11.3 million, a decrease of 18.5 per cent compared to H1 2016

Net profit:

Q2’17: KD2.0 million, down 58.1 per cent, compared to Q2 2016

H1’17: KD7.3 million, a decrease of 26.7 per cent compared to H1 2016

 

H1 Financial Performance Review:

span>Food Business Line: The Food Business Line accounted for 72.7 per cent of Group Revenue and comprises of Manufacturing and Distribution (52.8 per cent), Catering (13.3 per cent) and Services (6.6 per cent). Revenue reached KD78.3 million, an increase of 1.2 per cent compared with the same period in 2016.

span>Manufacturing and Distribution: H1 Revenue increased by 1.4 per cent, with broad based growth across our key operating units. This was largely driven by our food manufacturing divisions and the continued success of Danone products in our trading division.

span>Catering: H1 Revenue increased by 13.2 per cent driven by contracts won in Q3 2016.

span>Services: H1 Revenue declined by 17.7 per cent due to the temporary client-side disruption of business in Afghanistan and nature of the inconsistent tender flow resulting in periodic revenue fluctuations.

 

span>Non-Food Business Line: The Non-Food Business Line accounted for 27.3 per cent of Group Revenue and comprises FMCG and Pharmaceuticals (24.7 per cent of Group Revenue) and Industrials (2.6 per cent of Group Revenue). Revenue reached KD29.4 million, a decrease of 4.7 per cent compared with the same period in 2016.

span>FMCG and Pharmaceuticals: H1 Revenue decreased by 4.5 per cent due to the continued slowdown in the tenders offered by the Ministry of Health, however the difference is gradually being compensated by other areas in our FMCG business.

span>Industrials: Revenue decreased by 6.9 per cent driven by slowdown in the plastics manufacturing business.

 

Regional Business Highlights:

span>In Kuwait: H1 Revenue dropped by 1.2 per cent, as the strong start from the beginning of the year was curbed by a soft Ramadan shopping period.

span>In UAE: H1 Revenue down by five per cent, undermined by softer regional exports due to regional circumstances.

span>In Qatar: H1 Revenue grew by 2.3 per cent.

span>In KSA: H1 Revenue grew by 921.8 per cent as Mezzan continues to focus on gaining a foothold in the region’s largest consumer market.

span>In Jordan: H1 Revenue decreased by 39.6 per cent due to challenges to tender-driven business.