“As with recent periods, these financial results are a clear indication of the impact that the Breakthrough Program turnaround strategy has had on our business. Having completed an aggressive liquidation process in 2019, and having fully restructured our sales organisation, we are now focused on driving improved sales while targeting competitive gross margins. We have captured a healthy share of AC sales related to the SEEC program, and this remains an important growth avenue in the medium-term. In addition, developments in 2019 included the launch of our e-commerce platform, which we intend to build on in 2020, along with a strong uptick in sales across our Home Appliances portfolio.
Meanwhile, both Board and management are working hard to mitigate any adverse effect of the COVID-19 pandemic. We are monitoring the situation daily, and will introduce contingency measures for our supply chain and distribution network, should it become necessary. Our business continuity protocols remain in place and effective at the present time.”
Financial performance highlights: FY19
- Revenue of SAR 882.8 million increased by 14.1% year-on-year
- Gross profit of SAR 165.6 million increased by 65.8% year-on-year
- Operating loss of SAR 38.4 million decreased by 75.2% year-on-year
- Net loss of SAR 49.8 million decreased by 74.8% year-on-year
- Losses per share narrowed from SAR 3.12 in 2018, to SAR 0.79 in 2019
Breakthrough Program highlights
In Shaker Group’s core market of Saudi Arabia, the Breakthrough Program turnaround strategy has achieved the following outcomes, as at 31 December 2019:
Core Business Turnaround
- Sales revenue achieved positive growth momentum, delivering an 18.4% increase compared to 2018
Cost efficiency highlights:
- Employee costs in Saudi Arabia decreased by 14% from 2018
- Rent and leasing expenses in Saudi Arabia decreased by 49% year-on-year
Talent Upgrade Plan
- Critical senior management positions are hired and filled, while the Group re-allocated more than 50 positions across business units
- Performance Management Systems rolled-out and established
- Execution and tracking of key turnaround initiatives is conducted on an ongoing basis, while building-up new initiatives subject to business need and market dynamics
- Engagement with key principals is ongoing. Multiple growth avenues were identified, and execution is underway
- Joint collaboration has been achieved with principals on strategic initiatives
Mohammed Ibrahim Abunayyan, Chief Strategy & Transformation Officer at Shaker Group, commented:
“This was a rewarding year, during which we achieved meaningful results from the intensive and wide-reaching Breakthrough Program turnaround strategy. Its implementation has been supported by management and staff across the Kingdom, and its impact is clear. Sales revenue in Saudi Arabia improved by more than 18%, while the roll-out of an upgraded talent structure and improved operating efficiencies drove down costs to increase profitability. We’ve put the business in a strong position to capture the opportunities that are available to it – not just in our AC business, but across energy-saving and after-sales services, as well as in our growing Home Appliances offerings. Looking to 2020, we have every intention of building on our improved operating model, while navigating the market for short- and long-term growth opportunities.”
Impact and response: COVID-19
The Board has made an initial assessment on the impact of the recent global outbreak of COVID-19. The supply chain of the Group is currently dependent on parts and products sourced from the Far East, Europe and USA. The Group is currently managing its supplies to the local market through its existing inventory levels and orders that are in the pipeline, which will continue to be monitored in the light of the evolving situation. These orders are primarily from a local manufacturing facility, which is currently operational. Further updates regarding material developments in relation to COVID-19 will be provided by the Company, as required.
Outlook for 2020
As in 2019, key growth avenues for the Group include the Saudi Energy Efficiency Center’s (SEEC) high-efficiency AC units initiative, which is positively supporting revenues with the Company having achieved a boost in sales and a competitive share of the program. Further opportunity is provided by the development of the Saudi housing strategy, and private sector support initiatives, which reflect positively on marketing opportunities. The Group is exploiting its market share of the Multi V product range to bid for projects throughout the year.
An attractive opportunity is presented by Tarshid, the Saudi government’s National Energy Services Company, which is tasked with retrofitting assets owned by public or government entities – among them 2 million street lights, 110,000 government buildings, 35,000 schools, 100,000 mosques and 2,500 hospitals and clinics. Shaker Group is bidding for a healthy portion of these projects.
Having launched its e-commerce platform in 2019, the Group will build on the offer provided by its extensive portfolio of international Home Appliance brands, taking advantage of emerging retail channels that will better serve customers while achieving efficiencies across the sales and distribution process.
Shaker Group, which is listed on Tadawul (symbol: SHAKER), is a leader in the Saudi market as both a distributor for international electrical brands and a local manufacturer of LG Air Conditioners. The Company’s portfolio brands include LG Air Conditioners, as well as Indesit, Ariston, Maytag, Midea and Bissell in the home appliances segment. In 2015, the Group increased its stake in the UAE’s Emirates Energy Management Services (EMS) from 20% to 74%, and in establishing ESCO, as a business unit of Shaker Group, took an important strategic step towards diversifying operations and revenue streams.
About: Shaker Group
Shaker Group was founded in 1950 and was amongst the first in Saudi Arabia to introduce Air Conditioning & Home Appliances for Saudi consumers. Shaker Group is the exclusive importer and distributor of several leading international brands; including Maytag, Ariston, Indesit, Midea and Bissell in Saudi Arabia, and the sole distributer of LG Air Conditioners in Saudi Arabia. ESCO, as a business unit of Shaker Group, provides Energy Solutions. Shaker Group has been a publicly listed company on the Saudi Stock Exchange (Tadawul) since 2010. Throughout the years, Shaker Group has positioned its name within the top Saudi companies, providing a range of integrated solutions in terms of Air Conditioners and Home Appliances in the Saudi market and the region. For more information, visit: http://www.shaker.com.sa/
George Allen, Instinctif Partners
+971 55 104 3586
© Press Release 2020