Overheads, higher Zakat provision weigh on Zahrat Al Waha’s Q3 profit: Chairman
Ahmed Altheyab, Chairman of Zahrat Al Waha for Trading Co.
The decline in Q3 2024 figures was driven by higher overheads including selling expenses. The company sought to boost its client base outside the Central Region to expand reach across the Kingdom and eliminate risks of dependence on a limited number of clients. This, in turn, increased the transport fees and the financing costs, as the SAIBOR started to decline. Further, Zakat provisions increased due to the Zakat settlement difference for 2023, since the company sought to settle all outstanding obligations with third-party entities.
“We believe Q3 results are satisfactory given the fierce competition and the global economic backdrop,” said Altheyab.
Altheyab further explained that the prices of raw materials were relatively stable in July and August, and then they headed sharply downwards, and this indicates the prices are generally volatile.
Such a slump will impact the prices stability, and will further squeeze profitability, he said, noting that prices will stabilize a little and not for a long period, before they go up.
The local sales in Q3 2024 stood at 83.5% while exports accounted for 16.5% of the company’s total sales.
The capital expansions in the new printing & packaging segment are valued at SAR 45 million and were financed from internal resources to eliminate financing burdens on the new business activities. The new segment is aimed to diversify the sources of income, maximize revenue, as it is the most similar to the company’s current business portfolio, and to cater for the clientele’s needs from a single source.
Though Q4 2024 is not hit by seasonality factors, Altheyab indicated that the company seeks to boost demand during the three-month period, which will positively bolster operating and financial performance.
According to data available on Argaam, the company’s net profit declined by 63% to SAR 6.2 million for the end of the first nine months of 2024, compared to SAR 16.9 million a year earlier, with Q3 earnings at SAR 4.1 million.