Equipment House had no actual operating losses in Q4 2022: CEO

Barakat Al-Arifi, CEO of Scientific and Medical Equipment House

Scientific and Medical Equipment House Co. (Equipment House) did not record actual operating losses in Q4 2022, CEO and Managing Director Barakat Al-Arifi told Argaam.

He added that the company made an additional provision of SAR 35 million during the three-month period, in line with IFRS 9.

The fourth-quarter earnings reached SAR 9.7 million, a rise of 10% compared with a year earlier.

More than 95% of trade receivables and contract assets belong to government sector clients as per official contracts and credits, Al-Arifi said. He noted that, due to the lack of historical cases of realized government debt losses, while taking into account the highest credit rating assigned to the Kingdom, the management expects this provision to reflect positively on the company amid stability of government collections and a re-evaluation of provisions during the coming periods.

Government contracts contribute more than 90% w2a2`zof Equipment House’s 2022 revenues and profits, including various contracts with the Ministries of Health, Education, Interior and Defense.

The contract record amounted to SAR 3.34 billion by the end of 2022, of which SAR 2.32 billion belong to existing projects and SAR 1.02 billion are related to awarded projects, the top executive said, adding that the implementation of awarded projects is expected to start during the second and third quarters of 2023.

The sales of pharmacies, medicines and medical supplies amounted to SAR 33.8 million in 2022, compared to SAR 16.6 million in 2021.

Al-Arifi expected the company to win contracts worth at least SAR 950 million in 2023, and total revenues will likely grow by over 30% driven by the existing and new contracts.

As announced earlier, the new projects will start operations in the second and third quarters of 2023, which would reflect positively on the company's profits gradually starting from the second quarter, Al-Arifi said.

Equipment House reported a net profit after minorities of SAR 17.6 million for 2022, a decline of 77% from SAR 77.5 million a year before. The company incurred a loss of SAR 25.3 million in Q4 2022, according to data available with Argaam.