Driven by expansion in industrial manufacturing margins, Aamal has posted a half yearly net profit of QR305.5mn, up 23.5% on the same period in 2015.
The QSE-listed, diversified company’s net investment in capital expenditure rose by QR14.1mn to QR60.1mn (H1, 2015 - QR46.0mn), reflecting fleet expansion at the Aamal Maritime Transportation Services subsidiary, and the ongoing Phase-2 redevelopment works at the City Center Doha shopping mall.
Aamal chairman HE Sheikh Faisal bin Qassim al-Thani said, “The first six months of this year have witnessed a tremendous performance with total net profits growing by over 23% compared to the corresponding period in 2015. The majority of this growth is derived from margin expansion within our Industrial Manufacturing division, which now makes up over 38% of total company profits. As one of the leading industrial companies in the State of Qatar, Aamal Company is well-positioned to be a direct beneficiary of the country’s infrastructure-led development programmes.
“Although our industrial focus has clearly been the company’s primary growth engine, the strong contributions made by our other three divisions should not be overlooked. All these businesses occupy leading market positions across the entire Qatari economy. As with our industrial manufacturing activities, we will continue to invest to sustain our momentum, either through strengthening our existing operations or pursuing new opportunities after careful consideration. Our low level of financial gearing, allied to strong free cash flow generation, clearly puts us in a very advantageous position.”
Aamal’s overall revenues grew by 4.6%, which, together with a significant improvement in the underlying margin and a strong net profit contribution from its joint venture and associate interests, led to overall net profit rising by 91.8% to QR117mn.
The “outstanding performer” was Senyar Industries, as its two operations (Doha Cables and El Sewedy Cables) continued to win “profitable” contracts, along with a “tight rein” being maintained on costs, Aamal said.
Aamal Readymix also “performed” well, with its operating margin more than doubling due to higher sales prices being charged on new contracts; this degree of pricing power is reflective of the business’s strong competitive position.
Further upside came from Ci-San Trading, which benefited from its move into the marine transportation of aggregates in September 2015 and expansion of the fleet in the first quarter of this year.
Although revenues fell by nearly 6%, partly a “reflection of one-off supply chain issues out of Aamal’s control” that have now been resolved, margins improved, which the company said “will stand us in good stead going forward.”
“This improvement in margin is a good illustration of the importance we place on continually seeking operating efficiencies wherever possible without detriment to the underlying business,” Aamal said.
Phase-2 of the expansion and redevelopment of City Center Doha, one of the leading shopping malls in Qatar, continued apace and is on track for completion in 2018. As to be expected, this has had some marginal impact in terms of Aamal profitability in the short term as some of the spaces available for retail are being redeveloped.
“What is particularly pleasing in this period is that we have separately recognised a separately accounted for net profit contribution (QR3.4mn) from our joint venture - Aamal ECE,” Aamal said.
Revenues grew by 43.7% which together with a material expansion in the margin, led to overall net profit growth of 95.8%.
There were two main components to this growth, Aamal said. First, the strength and resilience of the existing businesses (boosted by the winning of a number of new contracts); and second, the acquisition of Family Entertainment Center and Winter Wonderland earlier this year, whose performance to date has surpassed Aamal’s “original” expectations.
Aamal vice-chairman Sheikh Mohamed bin Faisal al-Thani said, “Aamal has performed very creditably in the first half of this year, notching up an impressive rise in total profits of over 23%. This has been driven by margin expansion which is testimony to our relentless focus on profitable growth through careful allocation of capital and a strong emphasis on operating returns. By remaining at the vanguard of Qatar’s infrastructure-led development, it is my strong conviction that we are well positioned to take advantage of structural growth opportunities as they continue to evolve.”