Mezzan Holding reports H1 2017 financial results

Garrett Walsh

KUWAIT: Mezzan Holding KSC, one of the largest manufacturers and distributors of food, beverage, FMCG and pharmaceutical products in the Gulf, yesterday 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 percent from the same period last year, and bring H1 net profit to KD7.3 million, down 26.7 percent from the same period last year.

Mezzan Holding Executive Vice Chairman Mohammed Jassim Al-Wazzan said, “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.”

Mezzan Holding CEO Garrett Walsh said, “Q2 proved to be a quarter that had both opportunities and some internal and external challenges that were a drag on our 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 maximizing 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%, compared to Q2 2016
H1’17: KD107.8 million, down 0.6% compared to H1 2016
EBITDA:
Q2’17: KD4.0 million, down 40.6% compared to Q2 2016
H1’17: KD11.3 million, a decrease of 18.5% compared to H1 2016
Net profit:
Q2’17: KD2.0 million, down 58.1%, compared to Q2 2016
H1’17: KD7.3 million, a decrease of 26.7% compared to H1 2016

H1 Financial Performance Review:

Food Business Line: The Food Business Line accounted for 72.7 percent of Group Revenue and comprises of Manufacturing and Distribution (52.8 percent), Catering (13.3 percent) and Services (6.6 percent). Revenue reached KD78.3 million, an increase of 1.2 percent compared with the same period in 2016.
Manufacturing and Distribution: H1 Revenue increased by 1.4 percent, 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.

Catering: H1 Revenue increased by 13.2 percent driven by contracts won in Q3 2016.

Services: H1 Revenue declined by 17.7 percent due to the temporary client-side disruption of business in Afghanistan and nature of the inconsistent tender flow resulting in periodic revenue fluctuations.
Non-Food Business Line: The Non-Food Business Line accounted for 27.3 percent of Group Revenue and comprises FMCG and Pharmaceuticals (24.7 percent of Group Revenue) and Industrials (2.6 percent of Group Revenue). Revenue reached KD29.4 million, a decrease of 4.7 percent compared with the same period in 2016.
FMCG and Pharmaceuticals: H1 Revenue decreased by 4.5 percent 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.
Industrials: Revenue decreased by 6.9 percent driven by slowdown in the plastics manufacturing business.

Regional Business Highlights:
In Kuwait: H1 Revenue dropped by 1.2 percent, as the strong start from the beginning of the year was curbed by a soft Ramadan shopping period.
In UAE: H1 Revenue down by 5.0 percent, undermined by softer regional exports due to regional circumstances.
In Qatar: H1 Revenue grew by 2.3 percent.
In KSA: H1 Revenue grew by 921.8 percent as Mezzan continues to focus on gaining a foothold in the region’s largest consumer market.
In Jordan: H1 Revenue decreased by 39.6 percent due to challenges to tender-driven business.

 

This article was published on 09/08/2017