Sales growth, cost cuts support Q4 results; UAE success inspires GCC expansion: Nahdi CEO

Yasser Joharji, CEO of Nahdi Medical Co.

Nahdi Medical Co.’s sales rose 1.1% year-on-year (YoY) to SAR 8.7 billion in 2023, with profit margin at about 10.2% and net profit at SAR 893 million, Nahdi CEO Yasser Joharji told Argaam in an interview.

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Pharmaceuticals, the company’s main segment, bolstered the financial results, he said, noting the distinguished growth in the segment was driven by a rise in the pharmaceuticals’ medical insurance.

In addition, the health segment offered support, as the company entered this business a few years ago.

The fourth-quarter net profit grew 33% YoY boosted by sales growth, rationalized spending, feasible investment of cash, positive performance by new segments in healthcare through Nahdi Care Clinics, and the performance in the UAE, the CEO added.

He explained that during H1 2023, the company faced some challenges in the consumer products segment. It took rapid dynamic measures by diversifying the sales mix, offering products at competitive prices and ensuring high quality in pharmacies and on electronic platform. This contributed to improving profitability.

Johari further indicated that these measures reflected positively in the performance of consumer goods and cosmetics, particularly in Q4, which achieved a growth of 3.3%. This had a positive impact on the company’s performance, supported by favorable changes in the number of items, competitive prices, and promotional offers.

The e-platform sales surged by 25.6 % during 2023 to reach SAR 1.4 billion, representing 16% of the company’s total sales, he noted.

Elsewhere, the CEO stated that the UAE market, the company’s first international market, achieved a 236% growth by the end of 2023 as a result of expansions. The experience has motivated the company to expand in other Gulf countries.

He emphasized the effective management of capital through an ongoing program to improve the efficiency of cash management, which helps achieve a strong financial position and flexibility that enable the company to benefit from opportunities.

The top executive also noted that Nahdi always seeks to improve cash flows, which allows the company to finance its expansion from its own resources without the need for external loans, indicating that the high interest rates in the recent years gave this approach a great competitive advantage.

Meanwhile, he pointed out that Nahdi Care Clinics saw positive results in 2023, as the total number of branches reached six in Jeddah, Makkah and Taif. The clinics recorded one million patient visits by the end of the year, half of which were in-person and the remaining through online specialized medical consultations.

The company aims to expand across the Kingdom, Johari said, stressing the importance of this segment, especially as it supports the pharmaceutical segment.

In terms of profitability for clinics, he said that the company worked during the past two years to alleviate both the capital and operational costs, as it targets a light and suitable business model for rapid expansion, indicating that the clinics achieved strong profits, while the health segment is in the breakeven stage due to the easy work model.

The CEO further stated that the total number of the company’s pharmacies reached 1,120 in more than 140 cities and villages, as it opened 70 new pharmacies in 2023 and closed 36 small pharmacies.

Additionally, he pointed out that Nahdi is investing more in technology as it signed an agreement with Microsoft to develop the company's digital infrastructure.

According to data available on Argaam, Nahdi’s net profit rose to SAR 892.6 million at the end of 2023, from SAR 887.8 million a year earlier. Q4 net profit stood at SAR 170.5 million.