Shaker CEO says coronavirus impact on business limited

As the coronavirus pandemic continues to spread globally, local businesses find themselves grappling with steep revenue losses due to shrinking consumption levels.

While revenue flow is being harshly impacted in the short-to medium-term, chief executive of Saudi-based Al Hassan Ghazi Ibrahim Shaker Co. (Shaker), Azzam Almudaiheem, remained optimistic about the firm’s ability to cope with the challenging business environment.

The group’s supply chain benefits from geographical diversification in Asia, Europe, and North America, which helped in mitigating the negative effects of the coronavirus outbreak. The company is currently meeting local demand through existing stockpiles.

“The majority of orders are serviced from a local manufacturing facility, which remains operational at this time,” Almudaiheem told Argaam in an interview.

He mentioned that the company is closely monitoring the COVID-19 situation in order to keep business operations running efficiently.

Meanwhile, the group trimmed its net losses by 74.7% year-on-year (YoY) to SAR 49.8 million for the fiscal year 2019, due to a 14.1% YoY rise in revenue, and a 20% YoY decline in operating costs and other expenses.

While complying with the new Saudi Standards, Metrology and Quality Organization (SASO) regulations proved challenging, Shaker followed an aggressive liquidation program and restructured the sales team to achieve cost optimization. This considerably reduced rent and leasing costs, while boosting efficiency and improving sales.

“We have put forward the company on a solid platform for growth amidst new opportunities,” Almudaiheem said.

Business segments

According to the CEO, the air-conditioning segment will continue to account for the lion’s share of the revenue, but will be supported by other business units as well going forward. “Our home appliances portfolio showed immense potential in 2019, providing depth and diversity to our revenue base,” Almudaiheem said. 

The group’s flagship LG MultiV products account for approximately 35% of the Saudi market share for heating, ventilation and air conditioning (HVAC) solutions, whereas the split inverter segment enjoys over 50% share. On the other hand, the dishwasher segment accounts for 20%, while the dryer segment exceeds 30% of the total in-Kingdom market share.

“Our home appliances sector has grown exponentially in line with our projections, despite unfavorable market conditions and severe competition. We have modified our market strategy to bolster competitiveness of our products,” Almudaiheem stressed.

Outlook for 2020

Shaker is currently eyeing several projects in the private and public sectors to maintain the growth run in 2020.

With regards to the Saudi government’s “Tarshid” retrofitting program and economic growth in line with the Vision 2030 goals, the group is also set to bid for several retrofit projects in the Kingdom. The program will retrofit assets including 2 million street lights, 110,000 government buildings, 35,000 schools, 100,000 mosques and 2,500 hospitals and clinics.

“We believe that the Tarshid program is likely to yield exciting retrofitting opportunities for us. It is an ambitious KSA-wide scheme, and we are well placed to support it,” Almudaiheem said.

Meanwhile, the company is also gearing up to launch its e-commerce platform this year, which will be “another area of focus” for Shaker, the CEO concluded.

Write to Paromita Dey at paromita.d@argaam.com