Shaker diversifies product portfolio, plans 2 new stores: CEO

Mohammed Ibrahim Abunayyan, CEO of Shaker Group 

Al Hassan Ghazi Ibrahim Shaker Co. (Shaker Group) is diversifying its product portfolio, expanding online presence, boosting operational efficiency and bolstering strategic partnerships, CEO Mohammed Ibrahim Abunayyan told Argaam.

Shaker reported exceptional profit growth in Q3 2023, as earnings per share (EPS) surged 94%, Abunayyan noted.

LG Shaker reported an 80.39% year-on-year (YoY) profit hike in Q3 2023, as the factory is now catering to demand from over 20 countries in the Middle East and North Africa (MENA) region.

Additionally, Shaker Group operates six stores and intends to launch the seventh store over the coming weeks, with plans to open another one by year-end.

Abunayyan expects Shaker to boost investments in the Kingdom’s mega projects, which will reflect positively on the growth rates.

The CEO also touched on the performance of other business divisions, including home appliances and other heating, ventilation, and air conditioning (HVAC) solutions.

The following are the details of the interview:

Q: Shaker reported SAR 16.8 million profit in Q3 2023, compared to SAR 8.5 million in the year-earlier period. What is your comment on these figures?

A: Shaker’s stellar performance in Q3 2023 compared to Q3 2022, Q2 2023, and Q1 2023 was spurred by our team’s belief in the company’s promising potential and commitment to achieve sustainable growth rates.

Our continued success implies the company’s focus on diversifying its product portfolio, expanding its online presence, boosting operational efficiency and bolstering strategic partnerships. This includes our partnership with LG, as evidenced by the 80.39% YoY uptick in income from LG Shaker HVAC manufacturing plant during the current quarter.

Such a strategic direction enabled us to boost our market presence and weather the conventional seasonal trends. Reporting 94.4% higher EPS YoY, Shaker not only adapts to the market dynamics, but also determines market momentum. Our performance over the year mirrors Shaker’s adaptation ability and robust strategic approach, driving the company ahead.

Q: Can you elaborate on market demand for your main products in Q3 2023, compared to Q2 2023 and Q3 2022?

A: Q3 2023 witnessed increased demand for HVAC solutions and home appliances compared to Q2 2023 and Q3 2023. As for our products, the home appliances division capitalized on LG’s integrated product portfolio, coupled with Shaker’s marketing campaigns.

Demand for HVAC solutions was propelled by Shaker’s increased focus on new projects and maintenance contracts, allowing the company to generate higher margins.

Additionally, consumer sales helped boost operations, backed by our diversified product portfolio and leading brand name. Further, project expansions will pave the way for significant long-term partnerships, allowing for deepening relations with companies and other leading government entities.

We are committed to pursuing and leveraging this momentum to reach more successful results.

Q: What are the factors that contributed to Shaker’s 37% higher revenue in Q3?

A: Shaker’s robust revenue growth in Q3 2023 implied its strategic and operating potential. Such growth was backed by strong operating sales.

The home appliances division reported a 56.33% hike on a quarterly basis in revenue, propelled by the company’s strategy that aims to expand its product reach to fulfill consumer aspirations. Additionally, HVAC solutions posted 30.28% higher revenue YoY on an increased share in projects. Further, Shaker’s strategic partnership with LG notably enhanced the performance of LG Shaker factory, which boosted the company’s overall growth.

Moreover, the revenue growth was backed by the projects and maintenance business, coupled with the consumer sales, helping the company leverage various opportunities on the market.

Looking ahead, we focus on improving our core business divisions as well as our sales mix, including retail, e-commerce and projects.

Q: How do you evaluate demand for LG Shaker products and its performance in Q3 compared to Q3 2022?

A: LG Shaker delivered an ideal performance, with an 80.39% YoY surge in Q3 2023 earnings. The LG Shaker manufacturing facility enabled the company to expand its product reach to cover more commercial and residential entities.

The manufacturing facility now fulfills demand from over 20 MENA countries, mirroring our leading manufacturing abilities and high-quality products.

The facility’s stunning performance echoes Shaker’s commitment to innovation in HVAC solutions as well as exceptional quality products to meet consumer needs.

Q: How many stores does Shaker run across the Kingdom? Are there any plans for more openings?

A: Shaker currently runs six stores, which are strategically distributed across the Kingdom to cater to the needs of our extensive customer base. We intend to launch the seventh store over the coming weeks, and plan to open another one by year-end.

Our promising expansion plans not only imply our pursuit to develop the company’s presence in the retail sector but also reiterate our commitment to providing exceptional services to all categories.

Q: What about Shaker Group’s debts?

A: The group’s 9M 2023 total debts stood at SAR 521.9 million. Although Shaker managed to maintain its long-term debts at zero level, the short-term debts increased on higher SAIBOR rates.

However, it is still necessary to view this debt on the group’s business level. Although the sector where Shaker operates often needs huge capital to manage inventory and respond to variable market needs, we focus on sound financial management.

The lack of long-term debt indicates the group’s commitment to achieving financial stability, even when facing challenges from the volatile rates of short-term loans.

Q: How can you evaluate online demand for Shaker’s products in Q3?

A: Shaker’s Q3 2023 performance reflects the group’s continued endeavors to enhance user experience on its digital platform and its strategic and marketing initiatives, as well as the strong turnout for its online offerings.

Shaker’s commitment to e-commerce has become clearer than ever. This is evidenced by the significant growth witnessed in this field. The achieved success also mirrors Shaker’s ability to adapt to the changing consumer shopping behavior, as more clients have shifted to internet solutions to fulfill their needs of home appliances.

In addition, upgrading the enterprise resource planning (ERP) system and transition to S/4HANA ERP system from SAP is a strategic move that can boost Shaker’s online sales by predicting more demand from the group’s growing customer base via e-commerce platforms.

Q: What are your expectations for Q4 performance?

A: As we are moving ahead towards Q4 2023, we are optimistic about the group’s positive upbeat performance.

We expect more investments in the Kingdom’s mega projects, which will reflect positively on the company’s growth rates.

We will also boost our online presence and aim to provide our customers with an exceptional experience.

Moreover, our commitment to aftersales services helps ensure client satisfaction and add value in the long term.

As we continue to promote investment in the e-commerce platforms, we will attain better market position to meet the changing needs of consumers across the Kingdom.

Our focus on digital transformation, specifically the transition to the S/4HANA ERP system from SAP, to be rolled out in the first quarter of 2024, will contribute to our operational efficiency and online presence.