eXtra gains higher market share despite challenges: CEO

Managing Director and CEO Mohamed Galal

United Electronics Co. (eXtra) demonstrated robust performance in Q1 2023. Sales grew by 8% year-on-year (YoY), and store shoppers also increased during the three-month period, Managing Director and CEO Mohamed Galal told Argaam.

The company achieved its goals, as net profit, excluding the impact of higher finance costs, which are estimated at SAR 14.7 million and some non-recurring costs, came in at SAR 101.8 million, compared to SAR 97.5 million in Q1 2022.

eXtra’s retail segment posted strong results amid shrinking spending on electronics in the Kingdom during 2023 and a continued pressure on household disposable incomes on higher inflation in certain business activities and continued spending on other sectors.

Galal affirmed that eXtra’s market share increased, buoyed by customer confidence in its products and services, despite the challenges of lower spending in January and February by 5.4%.

Gross profit rose 8.1% year-on-year, leading gross margins to expand by 1.3% YoY to 21.8% in Q1 2023, on better sales mix as well as the growth in the maintenance and consumer finance services segments.

On the consumer finance performance, Galal said the segment recorded an estimated net profit of SAR 54.1 million in Q1 2023, compared to SAR 53.8 million in the prior-year period. It demonstrates outstanding performance, as United Company for Financial Services (Tas’heel) was largely buoyed by higher borrowing rates.

eXtra did not raise interest rates on the loans offered by Tas’heel to enhance competitive ability and grow its financing portfolio amid the current unfavorable conditions. This, in turn, boosted Tas’heel’s financing portfolio by 29% YoY.

Elsewhere, Galal said he earlier expected 2023 to be a challenging year for the retail sector as the current global geopolitical challenges, higher inflation and rising interest rates are likely to weigh on many business activities.

The company is fully ready to address any variables that could adversely impact its operations and which will have a transient impact Galal affirmed, noting that eXtra will proceed with its plans to realize its future goals and strategies.

The home appliance retailer posted an estimated profit of SAR 84.4 million for the first quarter of 2023, a decline of 13% from SAR 97.5 million a year earlier, Argaam reported.