Saudi Arabia - Jabal Omar Development Company (JODC), a leading Saudi developer, has recorded solid revenue for the first three months which surged 408% year-on-year (YoY) to SR109.6 million ($29.1 million) mainly driven by an increased activity in operational hotels and retail outlets related to Hajj & Umrah segment.
Announcing its financial results for period ending March 31, 2022, JODC said the revenue from hotel assets increased 4 times compared to the same prior year period, while the revenue from retail assets surged 11 times compared to the same prior year period.
During the three-month period, a greater number of visitors returned to Jabal Omar as Covid-19 related restrictions related to travel and the Hajj & Umrah segment were eased.
Gross loss for the period narrowed considerably to SR25.7 million compared to Q1 2021. Given a large portion of the company’s cost of doing business are fixed nature of the business’s the cost of revenue will continue to weigh on gross profit performance until the company’s operating assets return to full capacity.
In Q1, JODC recorded operating loss of SR72.2 million, significantly narrowing losses incurred last year. This is mainly owed to JODC’s aggressive rollout and implementation of cost containment measures and operational efficiency enhancing initiatives, it added.
Financial costs in Q1 decreased 46.6% YoY, driven by the positive realization of initiatives within the company’s capital structure optimization plan.
For the three-month period, the decrease was mainly attributable to the settlement of loans and the conversion of Ministry of Finance’s SR 1.5 billion loan into perpetual debt.
Net loss for the period narrowed substantially from Q1 2021, when the company suffered significantly from Covid-19 related tourism, mobility and Hajj & Umrah sector specific restrictions.
The company enjoys a sizeable asset base made up predominately of strategically and uniquely located infrastructure-enabled land. By the end of Q1 2022, total assets increased 1.4% quarter-on-quarter (QoQ) with Property, Plant and Equipment increasing 1.1% QoQ.
On the solid performance, CEO Khalid Al Amoudi said: "Our first quarter in 2022 has shown promise, progress and the continued positive impact the implementation of our ongoing transformation measures have had across the Company. We have seen 408% year-on-year revenue growth, driven in part, by the lifting of Covid-19 restrictions with over three quarters of the Kingdom fully vaccinated against the virus."
"Looking ahead, we remain optimistic, especially as the Hajj season approaches and the increasing number of Umrah pilgrims we have seen, setting a strong indicator for what to expect going forward post-Covid," he stated.
"Nevertheless, as we look to the year ahead, we remain resolute on forging ahead with the optimization and performance enhancement efforts across the company. With a more optimal capital structure in place, we have reported a significant decrease in our financial costs which continues to showcase our positive trajectory, increasing financial stability and sets the stage for our sustainable growth going forward," he added.
Project set for timely delivery
Al Amoudi said JODC continues to expedite project delivery as part of the company’s strategic and transformation priorities. It has made numerous improvements in this regard over the last two years including greater visibility on cost and completion dates as well as a holistic organizational restructuring of the project management teams to enhance efficiency.
These enhancements have led to Phase 2 being almost 85% completed and is expected to be fully operational during Q1 2023.
Similarly, Phase 3 is almost 90% completed with an operationally effective date expected during Q3 2023. In line with the influx of visitors expected during the upcoming Hajj season both N1 Mall in Phase 3 and the malls and apartments in Phase 2 will be operational ahead of Hajj to ensure JODC is able to capitalize on the significant number of visitors expected.
Hajj & Umrah sector key
The Saudi developer said it expects the positive revenue momentum seen over the past 2 quarters to continue with the removal of Covid-19 restrictions, the increase of travel and the effective efforts of the Government in the management of the pandemic.
"We expect to see a very strong recovery in the number of visitors over the year and the upcoming Hajj season in particular," stated Al Amoudi.
"JODC has already seen this recovery take place and bear fruit with over 6.6 million pilgrims performing Umrah during Ramadan 2022, according to official figures, which is highly encouraging and is a positive indicator for the remainder of 2022," he added.
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