BinDawood Holding Co. announces its Interim Financial Results for the Period Ending on 2023-09-30 ( Nine Months )

Gross Profit in Q3 2023 stood at SAR 420.9 million (31% of sales), compared to SAR 307.2 million (26% of sales) in Q3 2022. This significant improvement in Gross Margin reflects improved sales mix, easing of inflationary pressures and enhanced support from suppliers.

Operating Expenses in Q3 2023 were SAR 367 million vis-a-vis SAR 336.5 million in Q3 2022, due to expenses incurred on account of new store openings, amortization of intangible assets and also the full period impact of the operating costs incurred of the subsidiaries acquired in July 2022. However, notwithstanding the absolute increase in operating expenses, the ratio of Operating Expenses to Revenue declined from 28.5% in Q3 2022 to 27% in Q3 2023.

Net Profit increased to SAR 34.0 million, from a loss of SAR 48.0 million in the corresponding quarter of the previous financial year. This significant turnaround was the cumulative impact of higher sales and improved Gross Margin, which was partly offset by an increase in Operating Expenses.

Gross profit was SAR 420.9 million in Q3 2023 or 31% of sales versus SAR 452.0 million or 32% of sales in Q2 2023. Gross Margin declined on a sequential basis due to the fact that margins are traditionally higher during the Hajj and Ramadan Seasons that fell in Q2 2023.

Operating expenses were SAR 367 million in Q3 2023 versus SAR 364.3 million in Q2 2023. No major variance was noted in operating expenses as compared to Q2 2023, owing to the fact that an increase in opening costs during Q3 2023 was offset by the impact of amortization of intangible assets arising on the acquisitions recognized in Q2 2023 with effect from the date of the acquisition.

The Company’s Q2 2023 net profit was SAR 65.8 million versus SAR 34.0 million in Q3 2023. Net Profit declined due to the cumulative impact of a decrease in Revenue and Gross Margin.

Growth in sales primarily driven by a full-fledged Hajj and Umrah seasons. Customized marketing campaigns and loyalty programs also favorably impacted sales performance.

Both brands recorded impressive growth in revenues. BinDawood stores witnessed aggregate sales of SAR 1,332.5 million in 9M 2023, reflecting an increase of 15.4% over the corresponding period of 2022. Total sales of Danube stores stood at SAR 2,626.0 million in 9M 2023, compared to SAR 2,386.3 million in 9M 2022, an increase of 10%. The balance increase was attributable to the full period impact of revenue contribution of the subsidiaries of Future Retail for Information Technology (“FTR”) acquired in July 2022.

Gross Profit at SAR 1,289.5 million was 31.1% of sales in 9M 2023 vis-a-vis 29.9% of sales at SAR 1,069.0 million in 9M 2022. This can be attributed to an increase in supplier support and an improved product mix.

Operating Expenses in 9M 2023 stood at SAR 1,073.4 million, compared with SAR 964.6 million in 9M 2022. This year-on-year increase reflects :

– The full period impact of new stores opened in Q4 2022, expansion of existing store in Madinah, and costs associated with new store openings in 2023.

– The full period impact of operating expenses incurred by the two subsidiaries of FTR acquired in July 2022.

– An increase of SAR 12.0 million in the amortization of intangible assets arising from those acquisitions. There was no amortization cost recorded in 2022 since the purchase price allocation has to be carried out within one year of the date of the acquisition.

Net Profit stood at SAR 152.1 million in 9M 2023, compared to SAR 59.8 million in 9M 2022. This increase in Net Profit reflects the cumulative impact of an increase in Sales and Gross Profit, which was partly offset by an increase in Operating and FTR related expenses, as explained above.

The Company’s financial position continued to be strong with no bank debt. Cash generated from operations in 9M 2023 was SAR 760.6 million versus SAR 785.9 million in 9M 2022. As of 30th Sep 2023, the Company had a cash and cash equivalents balance of SAR 626 million including short-term deposits.

Significant changes in the Statement of Financial Position as at 30th September 2023 (for the nine-month period) were noted as follows:

– Non-current assets increased by 1.3% resulting from an increase in property and equipment.

– Current assets increased by 4.7% mainly because of increase in receivables balances, cash and cash equivalents and prepayments and advances.

– Current liabilities increased by 9.7% resulting mainly from increased purchases to fulfill the rising consumer demands during full scale Hajj and Umrah seasons.

– Non-current liabilities decreased by 1.5% in 9M 2023 because of decline in finance costs and increase in payments against lease liabilities.

– Shareholders’ equity increased by 2.5% driven by an increase in retained earnings (net profit for the period).