• Material impact of Breakthrough Program turnaround strategy realised by results
• Third-quarter gross profit of SAR 49.1 million improved by 79.7% year-on-year
• Nine-month revenue of SAR 698.7 million improved by 16.2% from 2018
• Nine-month net loss narrowed by 55.1% from 2018
Riyadh, Saudi Arabia, 7 November 2019: Shaker Group (“Al Hassan Ghazi Ibrahim Shaker Co.”, the “Company” or the “Group”), Saudi Arabia’s leading importer, manufacturer and distributor of Air Conditioners and Home Appliances, has announced its financial results for the period ended 30 September 2019. Third-quarter revenue of SAR 247.8 million grew by 42.5% year-on-year, and at SAR 698.7 million for the nine-month period improved by 16.2% from 2018. Gross profit of SAR 49.1 million in Q3 improved by 79.7% year-on-year. The Group’s Q3 net loss of SAR 6.7 million narrowed by 85.7% year-on-year, with an operating loss of SAR 6.2 million decreasing by 80.3%. The nine-month net loss for 2019 was SAR 46.3 million, narrowing by 55.1% year-on-year.
Management accredits the robust increase in revenues, and a significant reduction in net and operating losses, to the success of its Breakthrough Program, which focuses on strengthening and broadening revenue streams while rationalizing costs and improving operating efficiencies.
Eng. Azzam Saud Almudaiheem, Chief Executive Officer at Shaker Group, commented:
“These results are very pleasing and are a testament to the material impact that our Breakthrough Transformation Program has had in the last nine months. Now, we are focusing our efforts on seeking to achieve more competitive gross margins. In recent months, we have carved out a dominant share of AC sales related to the SEEC program, and this will remain another important growth avenue for our Saudi operations in the near- and medium-term.”
Q3 2019 financial performance highlights
• Total revenue of SAR 247.8 million improved by 42.5% year-on-year and decreased by 2.2% on the previous quarter
• Gross profit of SAR 49.1 million improved by 79.7% year-on-year and by 1.6% on the previous quarter
• Operating loss of SAR 6.2 million decreased by 80.3% year-on-year and increased by 5.6% on the previous quarter
• Net loss of SAR 6.7 million decreased by 85.7% year-on-year and by 38.1% on the previous quarter
“We have established a theme of continuous improvement, which has provided us with a healthy pipeline of major project opportunities, as well as energy audit and retrofitting mandates for our ESCO business unit. Meanwhile, we have boosted the strength of our B2B salesforce with senior appointments that will drive revenue growth and bring broader and deeper experience to our team. We are looking forward to completing the year and continuing our transformation, entering an exciting new chapter for the Group in 2020.”
Breakthrough Program highlights
In Shaker Group’s core market of Saudi Arabia, its Breakthrough Transformation Program has achieved the following outcomes as at 30 September 2019:
Core Business Turnaround
• Sales revenue maintained positive YTD growth momentum, achieving a 25% increase compared to the nine-month period in 2018, and a 48% year-on-year increase for Q3 2019
• Cost efficiency highlights:
Employee costs in Saudi Arabia decreased by 20% from 2018
Rent and leasing expenses in Saudi Arabia decreased by 52% year-on-year
Talent Upgrade Plan • All critical senior management positions are hired and filled.
• Appointment of Vice President for B2B Sales
• Performance Management Systems are rolled-out and established
• Execution and tracking of key initiatives is being conducted
Strategic Moves • Engagement with key principals is ongoing, to identify additional avenues for growth
• Joint collaboration is delivered with principals on strategic initiatives
Mohammed Ibrahim Abunayyan, Chief Strategy & Transformation Officer at Shaker Group, commented:
“What is most promising about our latest results is the tangibility of the impact of our Breakthrough Transformation Program. The implementation of the Program has been management’s main priority in 2019, and now we are seeing it delivering the expected results. We have achieved a marked improvement in sales across all segments and in operating efficiencies by reducing costs, enhancing our workforce and optimizing working capital management. We continue to push hard on the execution of our transformation plan, ensuring we remain on track across our KPIs during future periods.
On a year-on-year basis – for both the Q3 and nine-month periods – top and bottom line results have improved considerably. We have achieved this by an unrelenting focus on boosting sales performance at both structural and strategic levels. We therefore have reason to expect further achievements in relation to the Breakthrough – as well as greater exploitation of market opportunities – as we complete the year and move into 2020.”
Outlook for 2019
Growth avenues include the Saudi Energy Efficiency Center’s (SEEC) high-efficiency AC units initiative in order to support the private sector, which is positive impact on the company revenues, which is achieving a boost in sales and a competitive share of the program. Further opportunity is provided by the development of the Saudi housing strategy, and private sector support initiatives adopted by the government, which will reflect positively on marketing opportunities.
The Group is exploiting its market share of the Multi V product range to bid for projects throughout the year, in light of the real estate strategy adopted by the Saudi government, in addition to private sector projects that are expected to achieve a recovery bolstered by government spending. An attractive opportunity is presented by Tarshid, the Saudi government’s National Energy Services Company, which is tasked with retrofitting assets owned by public or government entities – among them 2 million street lights, 110,000 government buildings, 35,000 schools, 100,000 mosques and 2,500 hospitals and clinics. Shaker Group is bidding for a healthy portion of these projects.
Shaker Group, which is listed on Tadawul (symbol: SHAKER), is a leader in the Saudi market as both a distributor for international electrical brands and a local manufacturer of LG Air Conditioners. The Company’s portfolio brands include LG Air Conditioners, as well as Indesit, Ariston, Maytag, Midea and Bissell in the home appliances segment. In 2015, the Group increased its stake in the UAE’s Emirates Energy Management Services (EMS) from 20% to 74%, and in establishing ESCO, as a business unit of Shaker Group, took an important strategic step towards diversifying operations and revenue streams.