Apr 01 2012
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Aamal Company QSC ("Aamal") Financial Results for the full year ended 31 December 2011
Doha, 1 April 2012 - the Board of Directors of Aamal Company QSC (" Aamal "), one of the GCC's fastest growing diversified companies, today announces the financial results for the year ended 31 December 2011.
Group revenue up 56.9% to QAR 1,910.1m (2010: QAR 1,217.1m)
Gross profit up 15.3% to QAR 441.7 m (2010: QAR 383.1m)
Net profit* (after fair value gains on investment properties) decreased 5.0% to QAR 533.7m (2010: QAR 561.9m)
Net fair value gains of QAR 287.6m on investment properties (2010: QAR 329.0m)
Financial gearing** reduced to 10.2% (31 December 2010: 11.2%)
Adjusted*** earnings per share up 3.5% to QAR 0.41 (2010: QAR 0.40)
Reported earnings per share down 6.6% to QAR 0.99 (2010: QAR 1.06)
Net investment in capital expenditure of QAR 64.4m (2010: QAR 176.0m)
(nb. there may be slight differences due to rounding)
* Total net profit stated is after deduction of Head Office costs whilst net profit shown by division is before deduction of Head Office costs
** Net debt to net debt plus equity
*** EPS adjusted to show underlying profitability (i.e. excluding fair value gains on investment properties); also, in April 2011, Aamal issued and capitalised bonus shares so FY 2010 EPS has been adjusted accordingly (Company share capital increased to QAR 4.95bn from QAR 4.5bn)
H.E. Sheikh Faisal Bin Qassim Al Thani, Chairman of Aamal Company QSC, commented:
"2011 was a year of both significant change and growth for Aamal Company . Total group revenues rose by 56.9% over the year driven principally by an increase in revenues of over 100% in the Industrial Manufacturing Division. Industrial Manufacturing revenues now make up the majority of total group revenues, at 59% versus 45% a year ago, in line with our strategy to focus the business on meeting increasing demand driven by Qatar's huge infrastructure investment programme.
"To that end, we have strived hard to reposition Aamal as a predominantly industrial company, so it is particularly pleasing to see this hard work now start to pay dividends and vindicate our strategy as the optimal one to follow for our shareholders.
"Qatar has one of the strongest and fastest growing economies in the world, underpinned by the country's huge hydrocarbon wealth. As the country seeks to diversify and identify alternative, and sustainable, avenues of growth, this will naturally require the wider industrialisation of the economy, particularly with respect to infrastructure. Qatar expects to spend upwards of US$150bn on infrastructure developments over the next five years, as part of the Qatar National Vision 2030 development plan. The award of the 2022 FIFA World Cup to Qatar has served to accelerate and bring forward much of this spend.
"Through increasing its exposure to industrial activities, and in particular infrastructure, Aamal intends to capitalise fully on the opportunities that will be afforded by this rapid industrialisation. Part of our ethos too is to seize the first mover advantage and establish strong competitive positions in our chosen markets: our cables business is a fine illustration of this where we were the first manufacturer of low, medium and high voltage cables in Qatar. We will also be the first pipe company that manufactures both reinforced concrete and glass pipes when Advanced Pipes and Casts becomes operational in the fourth quarter of this year.
"Being alert to commercial opportunities as they arise is coupled with a focus on forming long term strategic relationships with leading world class multinationals in Qatar who view Aamal as the partner of choice. These multinationals are able to deliver the technical knowledge, brand and products that are required whilst Aamal is able to provide the necessary local market knowledge and skills on the ground. To this end, Aamal devotes considerable attention both to evaluating and identifying opportunities and selecting the appropriate strategic partners for them.
"However, it should not be overlooked that Aamal also continues to grow, diversify and innovate across other existing businesses too. We have described already the phenomenal growth in the Industrial Manufacturing Division but 2011 witnessed revenue growth across the remaining three divisions of Trading and Distribution, Property and Managed Services. It is important that we remain market leaders in these areas as they also offer significant potential growth as the Qatari economy continues to evolve apace. Our strength is in our diversity, in being able to offer a comprehensive and well-balanced exposure to Qatar, one of the fastest growing economies in the world. This is why I continue to be genuinely excited by Aamal Company 's prospects."BREAKDOWN BY DIVISION
All Figures in QARm and before deduction of inter-divisional revenue and Head Office costs
In 2011, revenues at Aamal 's Industrial Manufacturing division more than doubled, rising 105.7% to reach QAR 1,138.8m compared to QAR 553.5m in 2010. This impressive growth is a testament to the success of the Group's strategy in 2011 to reposition the Industrial Manufacturing division as the principal driver of the Group's growth, at least in the short to medium term, in order to capitalise on the rapid industrialisation of Qatar, and over time, the wider GCC region. The Industrial Manufacturing division now accounts for 59% of Group revenues.
The ready mix concrete market in Qatar continues to be highly fragmented with selling prices remaining under pressure due to the current level of oversupply in the market and a highly competitive environment. Despite this, Aamal Readymix , one of the largest producers in the market, won a number of significant new contracts during 2011 and, in particular, witnessed demand picking up in Q4 2011 as new projects began to reach tendering stage. With this trend set to continue in 2012, both utilisation rates and margins are expected to rise. In anticipation of this, in January 2012, Aamal Readymix increased its production capacity by over 60% with the addition of a new, state-of-the-art ELBA ready mix concrete batching plant which ranks as one of the largest in the Middle East. In addition, Aamal is introducing a new fleet of mixers and remains well positioned to benefit from the expected growth in this sector.
Aamal Cement Industries , specialising in the production of interlocking paving slabs and cement bricks, introduced a new range of paving slabs in 2011 including multicolour interlock paving, concrete paving, split hollow stone face effect and textured decorative paving. This new product range has been well received by the market and Aamal Cement is favourably positioned as one of the few producers of such products.
Doha Cables , the first cables manufacturing facility in Qatar, won several significant new contracts for power cables during 2011, These included two major contracts to supply KAHRAMAA, Qatar's sole transmission and distribution system owner and operator for the electricity and water sector for a period of two years.
In 2011, Advanced Pipes and Cast was granted the building permit for its new plant in Mesaieed. The 85,000m2 plant, which will be the largest in Qatar, is currently under construction and trial production is expected to commence in the fourth quarter of 2012. Advanced Pipes and Cast will be the only company manufacturing both reinforced concrete and glass pipes in Qatar, giving it a competitive advantage over other suppliers.
Qatar boasts one of the world's most dynamic and fast growing economies. The IMF has projected real GDP growth of 6% for 2012, making it one of the fastest growing economies in the world. Although it is likely that the growth rate will moderate in the next few years, Qatar's performance will almost certainly continue to be strong by international standards. There are huge opportunities driven by the country's hydrocarbon wealth, rapid economic growth and the sheer scale of infrastructure spending.
Aamal 's Industrial Manufacturing Division is targeting infrastructure projects in Qatar as well as in the broader GCC. Qatar plans to spend approximately US$150bn on infrastructure development over the next five years while the value of GCC current and planned capital projects is estimated to be in excess of US$1.6trn 2010-13 (Middle East Economic Digest). Furthermore, the FIFA World Cup awarded to Qatar in 2022 is acting as a catalyst to accelerate many of the projects that were going to be carried out to realise the Qatar National Vision 2030 development plan. Estimates for the additional or accelerated government expenditure on related construction, transport and infrastructure for the FIFA World Cup vary between US$57bn (Moody's) and US$64bn (Standard & Poor's).
TRADING AND DISTRIBUTION
Revenues for Aamal 's Trading and Distribution division increased 22.1% from QAR 428.7m in 2010 to QAR 523.6m in 2011 and accounted for 27% of total Group revenues in 2011. Revenue growth has been driven by particularly strong performances from Aamal Trading & Distribution, Aamal Medical and Ebn Sina Medical.
Net profit margins across the whole division increased from 11.1% in 2010 to 12.1% in 2011 as margins at Aamal Medical and Aamal Trading & Distribution rose due to an increase in revenues from new contracts.
For example, during the year, Aamal Trading & Distribution won several new tenders, successfully adding a number of significant new customers across the range of its Automotive, Air Conditioning and Procurement divisions. In December 2011, the Automotive division also launched its second tyre showroom in Qatar, located in Markyhia, a neighbourhood of Doha. The new showroom, which offers a full range of tyre services, is equipped with the most advanced state of the art equipment
In line with Aamal Medical's strategy of introducing a more diversified range of medical equipment catering to specialty healthcare needs, last year the Company focused on identifying the market's specific requirements and ensuring a better understanding of the growth trends in the market. Accordingly, during the year Aamal Medical, recognised as one of the leading medical equipment suppliers in Qatar, successfully introduced a broader product range to serve these various higher-growth specialties identified within the healthcare sector, including healthcare IT and pharmacy automation solutions, laboratory equipment and physiotherapy equipment,.
During the year, Ebn Sina Medical, the leading pharmaceutical distributor in Qatar, signed a number of new exclusive distribution agreements including those with Labatec, a leading Swiss pharmaceutical company, Biopharm, the Egyptian group specialising in pharmaceutical, nutraceutical, and cosmetic products, Mendor, the Finnish health technology company specialising in diabetes care solutions, and Vitane Pharmaceuticals, the global pharmaceutical company headquartered in the US. In addition, the Company signed an exclusive agreement with Grohe AG, the world's leading single-brand manufacturer and supplier of sanitary fittings, for the distribution of its Rainshower® Next Generation line, the fashionable and award-winning eco-conscious shower range.
Revenues for Aamal 's Property division increased 6.7% to QAR 213.7m in 2011 from QAR 200.3m in 2010 and accounted for 11% of total Group revenues in 2011. Divisional revenue growth was primarily driven by revenue growth at Aamal Real Estate, although City Centre Doha still accounted for the lion's share of the division's total revenues (2011: 74%; 2010: 78%). Net profit margins before fair value gains on investment properties across the whole division fell slightly from 77.9% in 2010 to 75.3% in 2011 mainly due to an increase in repair and maintenance, and house-keeping expenses to ensure that properties were maintained to a high standard.
Fair value gains on investment properties for 2011 were QAR 287.6m (2010: 329.0m).
Occupancy at City Center Doha, the largest shopping centre in Qatar and one of the biggest in the region, dropped slightly to an average of 90% in 2011. 10% was strategically held back to allow for the active management of the shopping mall and for better space allocation following the planned second phase expansion.
In 2011, work commenced on Phase 1 of the City Center expansion project whereby an additional 7,000m2 of retail space will be added to accommodate an additional 60 shops. The Phase 1 expansion is scheduled to be completed by the end of Q3 2012 Work is also underway on the addition of 400 new parking spaces, representing a much needed 25% increase in parking capacity at City Center, and which is expected to be completed in August 2012. This will be followed by the Phase 2 expansion, which is due to be completed in 2013, also involves plans to add more shops and redesign the back area of the mall to be directly connected to the front areas. The expansion of City Center Doha is in line with Aamal 's strategy to design and build projects with flexibility in mind, so that capacity can be added at a later date at minimal cost.
In 2011, Aamal Real Estate opened the new Markhiya residential complex which was fully leased out from the beginning of April 2011. This complex is a 45 villa residential compound spanning 55,000m2 centered around an artificial lake and comprising a library, shops and restaurants.
Revenues for Aamal 's Managed Services division increased 25.8% to QAR 57.5m in 2011 from QAR 45.7m in 2010 and accounted for 3% of total Group revenues in 2011. This increase in revenues was primarily attributable to the first year of operations by Aamal 's 51% joint venture, Johnsons Control,
Net profit margins for the division fell from 22.1% in 2010 to 13.4% in 2011 due primarily to an increase in direct costs at Aamal Services and the costs of opening ECCO Gulf's new call centre in July 2011. The new state-of-the-art facility, which has a physical capacity of up to 120 seats and a technological capacity of up to 500 seats, utilises the Vocalcom hermes.net multimedia contact centre platform. ECCO Gulf expects that the new call centre will lead to more contract wins in 2012.
Aamal Travel, which provides a comprehensive range of travel services, won a number of new major contracts in 2011 and began a significant showroom expansion which is expected to be completed in the third quarter of 2012.
Aamal 's joint venture with US Johnson Controls Inc. provides facility improvement and energy solutions to customers in Qatar. Johnson Controls Qatar offers green building and building efficiency solutions using eco-friendly materials and techniques that helps lower carbon emissions and lower electricity consumption by approximately 30%. This is in line with Aamal 's strategy to offer environmentally-friendly products and services.
SUMMARY AND OUTLOOK
H.E. Sheikh Mohamed Bin Faisal Al Thani, Vice-Chairman of Aamal , commented:
" Aamal now derives the majority of its revenue from its Industrial Manufacturing Division; as such, it is uniquely positioned to capture the opportunities afforded by this stage in the wider industrialisation of the Qatari economy, driven by infrastructure spending, as the country seeks to diversify and modernise. Testimony to the success of the Group's repositioning is borne out by the rise in revenues of the Industrial Manufacturing Division in excess of 100% in 2011. With the foundation blocks now laid in place, I am very confident by the Group's ability to capture these significant opportunities that are available."
Tarek M. El Sayed, Managing Director of Aamal , commented:
" Aamal Company has had another successful year, consolidating and building upon the initiatives put in place over a number of years. The Group, through its scale and business mix, is one of the few Qatari companies with the business model to benefit across the economic spectrum, offering investors a unique opportunity to gain exposure to the rapidly expanding Qatari economy."
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PLEASE NOTE: A video webcast of Aamal Company management presenting the 2011 Full Year Results is available for equity analysts and investors to download from the Investor Relations section of the Aamal Company website:
Overview of Aamal
Aamal Company is one of the GCC's fastest growing diversified conglomerates, delivering a CAGR in net profit before fair value gains on investment properties of 20% from 2006-2011 and generating revenues of QAR 1,910m (US $524m) in 2011. Focused on sustained, profitable growth and strongly diversified for balanced exposure across Qatar's rapidly growing economy, Aamal 's operations comprise 23 business units with market leading positions in the key industrial, retail, property, managed services and medical equipment and pharmaceutical sectors. Aamal is one of the largest diversified companies quoted on the Qatar Exchange, having been listed since December 2007.
© Press Release 2012
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