Maharah expects positive results in Q3, seeks to improve profit margins: CEO

Abdulaziz Alkathiry, CEO of Maharah Human Resources Co.

 Maharah Human Resources Co. is forecast to report positive financial results in Q3 2022, due to the start of the academic year, CEO Abdulaziz Alkathiry told Argaam.

The company sees 2022 as an important year in building the future, as it looks forward to maintaining growth and achieving better performance over the coming period, he added.

The Saudi-listed firm continues to improve profit margins by controlling costs, raising utilization rates and workforce, as well as boosting its market share by attracting more workforce.

Commenting on a decision to recruit domestic workers from Indonesia, Alkathiry pointed out that the company is expected to expand its workforce, which will lead to a positive impact, especially as Maharah braces for its horizontal expansion plan.

The company plans to have presence across most of the Saudi cities in the near future.

Interview excerpts:

Q: Maharah reported a profit decline in Q2 2022. How do you see these results?

A: Maharah’s vision for 2022 targeted the return to the pre-pandemic levels in terms of manpower and market share gains through providing labor services to the corporate sector and domestic labor services to individuals. Thus, the company needed to increase its workforce by record numbers after a partial halt of recruitment activities in 2020 and 2021 due to the COVID-19 outbreak. The firm made great efforts to lure a large number of professional and non-professional human cadres, which led to incurring higher costs.

Further, the company exerted tireless efforts to boost H1 2022 revenue by 23% compared with a year earlier. Consequently, Q2 2022 earnings increased by 10% quarter-on-quarter (QoQ) to SAR 27 million, from SAR 25 million. However, the Q2 2022 profit decline year-on-year (YoY) was due to consolidating the financial statements of the newly incepted firms and recently acquired entities, which are still at the restructuring phase. Maharah is implementing new strategies and growth plans in these new firms, which will reflect positively on the company over the coming period. We are optimistic about recording positive results gradually over the next period.

Q: What are the latest developments related to Growth Avenue Co.’s (GAC) acquisition agreements?

A: GAC is in final stages to finalize the acquisitions disclosed earlier on the Saudi Exchange (Tadawul), which were planned in line with Maharah’s strategic plan revealed earlier this year. The relevant updates will be announced after finalizing the regulatory approvals.

Q: What is the impact of the decision to allow recruitment of Indonesian domestic workers on the company?

A: The human resources sector is promising, and the government’s strategy, represented in Saudi Vision 2030, foresees mega projects, new industries, and a qualitative transition.

The Crown Prince’s statement on the population density in the Kingdom over the coming few years will largely help increase demand for workforce.

Regarding the decision to allow recruitment of Indonesian domestic workers, Maharah will likely employ more domestic workers from Indonesia, which will positively boost the company’s horizontal expansion plans and presence in several Saudi cities in a short period.

Q: What about the expected number of manpower contracts in 2022?

A: Maharah reported higher revenue due to an increase in workforce and related contracts concluded in 2021 and 2022.

The human resources firms usually adopt a flexible business model, which helps them change the number of these contracts on a quarterly basis in line with their diversified services. These contracts can be either temporary or permanent based on client categories.

Further, Maharah, while attracting new strategic clients across various business sectors, is fulfilling its business goals and undertaking board-approved projects, which are regularly assessed in line with the applicable key performance indicators (KPI).

Q: What are Maharah’s investments in financial instruments? What are the target sectors?

A: Maharah created an investment portfolio run by a specialized bank, and such investments are based on the cash investment policy approved by the investment committee and board of directors. They focus on low- to medium-risk investments, such as Sharia-compliant deposits, Murabaha facilities, sukuk and some equities.

The portfolio, whose performance is measured weekly, was created to make the optimum use of its monetary assets to generate higher returns than the direct deposits that were impacted by slight profit margins over the last period.

These monetary investments will be utilized to finance the company’s future acquisitions and bolster its financial position, with the help of efficient cadres in the company.

Q: When will the recently concluded acquisitions reflect on operations and profitability?

A: These acquisitions were in line with the company’s plans and growth strategies. Promising industries and activities were eyed. Maharah carefully selected its recent acquisitions and seeks to generate the target benefit. Every firm is closely monitored to deliver outputs. However, newly-incepted firms need more time to show their financial impact.

Maharah restructured these firms and named new CEOs to head them. The acquired or incepted firms are still under development. We are looking forward to a robust future for these companies, which will reflect positively on Maharah’s profitability from 2023.

Q: How do you see Maharah’s performance in Q3 2022?

A: We continue to improve profit margins by controlling costs, raising utilization rates and manpower, as well as increasing our market share through attracting more labor force and providing more services to the business and individual sectors.

We have launched several initiatives to improve our business as well as integrate with the newly acquired or established firms.

The company is expected to post positive results in Q3 2022 on the start of academic year. We see 2022 as an important year for building the future. We look forward to maintaining growth and achieving better performance over the coming period.