Saudi business healthy; sluggish retail demand incidental: Fawaz Alhokair CFO

Mohammed Abbaoui, Chief Financial Officer of Fawaz Abdulaziz Alhokair Co. told Argaam that the business environment in Saudi Arabia is healthy and assuring, and that his company’s sluggish sales recently were ‘incidental.’

“The implementation of Vision 2030’s objectives will definitely place the retail sector on the right track,” he said in an interview with Argaam today.

The Saudi-based specialty retailer saw its net income decline by 76 percent year-on-year to SAR 103.2 million in the fiscal year ending March 31, compared to SAR 425.3 million a year earlier.

Abbaoui said his company was taking several efficiency-raising measures to improve performance. “We plan to close 50 to 75 loss-making outlets in 2018, and will continue to watch our expenses and purchases closely to reduce slow-moving inventory.”

He said his company was pushing forward with Saudization (workforce nationalization) plans, which would render positive results in the medium to long term. “Now Saudi nationals account for 85 percent of our workforce,” he said.

Abbaoui added that the company reaped SAR 50 million dividends (profit share) from investments in associates and subsidiaries. “These dividends are not integral part of our balance sheet, but they boost the bottom line.”

The company saw its ‘other operating income’ decrease by SAR 64.4 million on a rise of financing costs of a short-term loan, and on a forex translation loss at certain countries where the company operates.

The company has a total debt of SAR 3.187 billion, most of which are owed to local banks, said Abbaoui, adding that they secured recently a SAR 1.125 billion long-term murabaha finance from NCB, Samba Group and Abu Dhabi Islamic Bank (ADIB).

“We plan to reduce our total debt to below SAR 3 billion by March 2019.”

The top official stressed intention to focus on Saudi market by opening 10 to 14 cosmetics outlets in 2018, and possibly opening three to four Alef stores (still under study) for marketing Apple products in Riyadh, Dhahran and other cities.