eXtra CEO says Q3 results ‘outstanding’ despite challenges, market share to grow further

One of eXtra's showrooms

United Electronics Co. (eXtra) was able to record "outstanding” financial results during the third quarter of this year, despite the continued unfavorable conditions, CEO and Managing Director Mohamed Galal said in a statement to Argaam.

Challenges included the historically high cost of borrowing during the current period.

This is in addition to the soaring inflation rates of some economic activities in the Kingdom such as housing, food and beverages as well as hotels, which in turn weigh on consumer spending and curtail the size of the local electronics market, the CEO elaborated.

He explained that, based on the latest reports, the Saudi electronics market continued to contract year-on-year (YoY) by an estimated 7.7%. However, eXtra maintained growth in retail sales in Q3 2023, underscoring the company’s ability to boost its market share in most of the electronics and home appliances divisions in the Kingdom.

Galal added that the company succeeded in providing the best promotional offers to its customers in Q3 2023, through its operational superordinate in understanding the customers’ needs of goods and services.

This is in addition to the support of the "Lowest Price Guarantee" policy that distinguishes eXtra from other competitors. Besides, the company provided several other discounts, the most important of which were in celebration of the Saudi National Day at the end of the quarter, which highly contributed to the results of the three-month period, according to the CEO.

He pointed out that higher services revenues during Q3 2023, whether through after-sales services in the retail segment or revenues from consumer financing arm, United Company for Financial Services (Tas’heel), led to a 5.7% YoY hike in revenues during the quarter, bringing the year-to-date (YTD) growth in revenues to 3.4% compared to a year earlier.

The CEO further explained that eXtra's gross profit grew positively during the same period, supported by an improvement in the retail mix and an increase in revenues from the consumer financing segment. The company’s gross profit climbed YoY by 11% and 8.4% in Q3 2023 and the first nine months of 2023, respectively.

Besides, the gross profit margin expanded to nearly 23% in the third quarter of 2023 from 21.8% a year earlier.

As for the consumer financing segment, it achieved “good results” during the same quarter, with Tas’heel’s profit rising by almost 18.2% to SAR 53.4 million from SAR 45.2 million in Q3 2022.

Tas’heel’s YTD earnings to SAR 157.2 million, compared to SAR 144.1 million for the same period last year, lifted by growth in the company's financing portfolio, despite the aftermath of soaring financing costs (FCs) this year.

One-off losses of SAR 38 million hurt eXtra’s net profit for the current period, given the suspension of expansion activities in Egypt. This is in addition to being negatively impacted by a YoY increase of nearly SAR 39.6 million in FCs which, if excluded, would result in an adjusted net profit of around SAR 341.9 million for 2023.

Going forward, the top executive said overall inflation rates in the Kingdom are almost the lowest among regional peers, if not also among global ones. Once spikes in consumer inflation subside, the pace of the return of consumer spending on the electronics and home appliances sector would accelerate to normal levels in the future, putting eXtra at the forefront of this potential in the medium and long terms.

At the operational level, the company mainly focuses on increasing its market share and challenging itself to meet customers' aspirations, approaching them through various channels, while providing everything new in the retail world.

According to data available on Argaam, eXtra's profits fell 17% to SAR 264.3 million by the end of the first nine months of 2023, from SAR 318.8 million during the same period of 2022. Further, Q3 2023 profit inched up by nearly 26% YoY to SAR 118.2 million.