Mezzan Holding announces FY 2017 financial results; revenue KD 204.5m

Board recommends a cash dividend of 22 fils per share with a total payout of KD 6.8m Financial year net profit KD 12.9 million

KUWAIT: Mezzan Holding KSC, one of the largest manufacturers and distributors of food, beverage, FMCG and pharmaceutical products in the Gulf, yesterday announced the company’s financial results for the year 2017. The company maintained its revenue performance despite a challenging economic environment, a testament to its defensive product offering and strong fundamentals. The year presented numerous unanticipated one-off external factors that challenged profitability but also helped identify areas for further improvement.

Despite those challenges, and on the back of a strong balance sheet and enhanced working capital position, Mezzan invested in value-add projects including capacity enhancements, value chain improvements, warehouse infrastructure, as well as branding all aimed at driving future growth and enhance efficiencies.

Mezzan Holding Executive Vice Chairman Mohammad Jassim Al-Wazzan said: “2017 proved to be a challenging year; where Mezzan was faced with a number of one-off unanticipated challenges. However, we maintain our focus on strengthening our regional presence with leading positions in each of the our categories. The year 2017 witnessed the highest capital expenditure year on record, and we expect these investments to grow our profitability in 2018 and beyond.”

Garett Walsh, CEO of Mezzan Holding added “Disruptions to our supply chain in Qatar and temporary halt of operations in Afghanistan ultimately dragged on our profitability in 2017. We have taken the necessary steps to recover from these external factors. We are confident of our future, as our core business continues to prove its resilience, with our Food Manufacturing and Distribution division showing modest topline growth despite the headwinds. Our capital spending added production capacities in our core sectors, and others, will enhance efficiencies going forward.”

FY 2017 Financial Performance Review Food Business Line: The Food Business Line accounted for 75.4 percent of Group Revenue. The Business Line comprises the following three divisions: Manufacturing and Distribution (generating 53.9 percent of Group Revenue), Catering (generating 14.4 percent of Group Revenue) and Services (generating 7.0 percent of Group Revenue). Total Revenue for the Food Business Line reached KD154.2 million, a slight decrease of 0.7 percent compared with the same period in 2016.

Manufacturing and Distribution: Revenue increased 1.0 percent.

Catering: FY Revenue increased by 10.2 percent. Services: FY Revenue declined by 25.7 percent. Non-Food Business Line: The Non-Food Business Line accounted for 24.6 percent of Group Revenue. The Business Lines comprises FMCG and Pharmaceuticals business division (generating 21.8 percent of Group Revenue) and Industrials (generating 2.8 percent). Revenue reached KD50.3 million, a decrease of 3.3 percent compared with the same period in 2016.

FMCG and Pharmaceuticals: FY Revenue decreased by 3.7 percent.

Industrials: FY Industrials revenues decreased by 0.4 percent.

Regional Business Highlights

In Kuwait: FY Revenue grew by 1.8 percent due to steady performance as the local retail market returns to buoyancy.

In UAE: FY Revenue decreased by 12.7 percent due to lower exports to Qatar and the impact of excise tax introduced in October 2017.

In Qatar: FY Revenue grew by 3.2 percent driven by resolving supply chain issues putting sales and profitability back on track.

In KSA: FY Revenue grew by 243.5 percent as Mezzan continues to focus on gaining a foothold in the region’s largest consumer market.

In Jordan : FY Revenue decreased by 44.8 percent due to challenges to tenders driven business.

In Afghanistan : FY Revenue decreased by 16.1 percent as operations were suspended for three months. The situation was resolved in August

In Iraq : FY Revenue grew by 34.3 percent.