Thank you for standing by. My name is Janice and I will be your conference operator today. At this time, I would like to welcome everyone to Baladna's conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad, and if you would like to withdraw your question, press star one again. Thank you. I would now like to turn the conference over to Phibion. You may begin.
Thank you, Janice. Good afternoon to you all. I would like to welcome you all to the Baladna 1H and 2Q 2026 Earnings Conference Call. On the call today from Baladna's management team, we have Ghulam Abbas, the Senior Finance Director. As usual, he will first give us an overview of what transpired during the quarter, and then we have a Q&A session immediately after. Let me now hand over the call to Ghulam to begin. Over to you, sir. Please go ahead.
Thank you so much, Phibion, and good afternoon, everyone. Today, we are here to discuss Baladna's financial results for the six-month period ended 30th June 2026. My name is Ghulam Abbas, and I serve as a Senior Director of Finance here at Baladna. Thank you all for taking the time to join us today. The presentation material has already been shared and is available on our website as well. Before we begin, please note that today's discussion may include some forward-looking statements based on current expectations and assumptions. Actual results may differ due to external factors. The first half of 2026 was another strong chapter in Baladna's growth journey, marked by solid financial and operational performance. We also made meaningful progress on our international expansion in Algeria and Syria while further strengthening our leadership in the domestic market through continuous innovation and disciplined commercial execution.
The ongoing right issue, which is expected to strengthen our capital base and accelerate our long-term growth strategy, is another key highlight of the period under discussion. The strong support from shareholders reflects their confidence in our vision and business model. I'll share more insights about right issue during the later part of the call. With that, let me first take you through our financial and operational performance before providing an update on the strategic progress across our international businesses, including the key milestones achieved during the period. Turning to financial performance, I'm pleased to report another strong set of results for the first half, reflecting the continued strength of our core businesses and disciplined execution.
Despite the ongoing regional situation, our revenue for the first half has increased by QAR 2.6 million 2.6% versus last year to QAR 660 million, supported by continued growth across retail channels, milk powder sales under government supply chain agreements, the successful renewal of evaporated milk tender, and launch of new categories, including Baladna's ice cream range. Together, these initiatives strengthens our commercial performance and supported balanced top-line growth during the period. Disciplined cost management and an optimized product mix drove a strong improvement in profitability. Gross profit increased by 14.2% to QAR 119.2 million, with margin expanding from 25.9% - 28.8%. The momentum continued further down the income statement.
EBITDA increased by 7.5% to QAR 477 million, while margin improved to 72.4%, supported by our core business and higher fair value gains on our investments and securities. Net profit increased by 10.2% to QAR 365 million, with margin improvement to 55.3%, reflecting both operational strength and the contribution from our diversified investment portfolio. Beyond earnings growth, the business generated healthy operational cash flows, providing flexibility to fund capital investments, our international expansion, and a strong liquidity position. Beyond earnings growth, the business generated healthy operational cash flows during the period. Providing flexibility to fund capital investments and expanding on our international expansions. Turning to operational performance, the first half was characterized by continued commercial momentum, product innovation, and disciplined execution, further reinforcing our leadership in Qatar's dairy market.
Our retail business continued to perform strongly during the period, with revenue from retail key accounts up by 5% and retail traditional trade up 7% year-on-year, supported by continued product innovation and sustained consumer demand across core dairy and juice categories. While the HORECA channel remained broadly stable due to evolving regional environment, our diversified channel mix and disciplined commercial execution enabled us to maintain strong overall momentum. Innovation remains central to our growth strategy. During the first half, we expanded our product portfolio to 282 SKUs, including 29 new products across dairy and juice categories. A key highlight was the introduction of new ice cream range, expanding our consumer offering into the dairy ice cream category. Launched in peak summer season, it is well positioned to benefit from seasonal demand while deepening consumer engagement and driving incremental retail growth.
We also continue to strengthen our distribution network, which now comprises 149 sales routes serving more than 3,800 customers across Qatar. The continued expansion has enhanced product availability, improved market penetration, and further strengthened our relationship across both modern and traditional trade channels. Another important achievement during the period was the successful renewal of government of UHT tender for the year 2026. Beyond reinforcing our leadership in this key product category, the renewed contract provides greater demand visibility and strengthens the resilience of our core dairy business. Overall, these achievements reflect the strength of our integrated business model and our ability to translate innovation and disciplined execution into sustainable long-term growth. Moving to international expansion strategy. The first half marked another period of meaningful execution across our priority growth markets, translating long-term vision into tangible progress that will underpin the next phase of growth.
In Algeria, execution continued to gather momentum, with significant progress achieved across infrastructure development, arable farming, and construction activities. We launched dairy cattle import program from the U.S. with the first airlift scheduled for November 2026, supporting the phased introduction of approximately 30,000 Holstein Friesian cows. Construction of the dairy farm also commenced while the processing facilities progress into equipment supply stage. In Syria, we also achieved several important milestones. Construction commenced at our manufacturing facility in Adra Industrial City following completion of key design, land consolidation, and environmental approvals, while engineering and procurement activities continue to advance towards operational readiness. Collectively, these achievements demonstrate that our international expansion continue to advance in a disciplined, structured manner. While these projects remain long-term investments, we are encouraged by the progress achieved and remain focused on executing each phase with the same discipline that has underpinned our success in Qatar.
Moving to right issue. I would like to share some insights, one of the more significant milestones during the first half. Following shareholder approval, the right issue is expected to proceed through the issuance of approximately 536 million new ordinary shares on the basis of one share for every four existing shares, raising approximately QAR 541 million . Upon completion, the company's paid-up share capital will increase from QAR 2.14 billion -QAR 2.6 billion , further strengthening our capital base and financial flexibility. The right issue marks an important milestone in our growth journey and reflects shareholders' strong confidence in our strategy, operation model, and long-term growth perspective. As outlined in right issue prospectus, the proceeds are intended to support investments that drive our long-term growth, including the continued expansion of our business in Qatar and the development of integrated dairy and agriculture businesses across the region.
This includes evaluating a fully integrated dairy platform in Syria, spanning farming, processing, manufacturing, packaging, warehousing, and logistics infrastructure. We are confident that the right issue will reinforce Baladna's financial resilience and provide a powerful platform for executing its ambitious growth strategy. By enhancing liquidity and strategic flexibility, it will enable the company to capitalize on compelling investment opportunities while maintaining rigorous capital discipline and maximizing long-term shareholder returns. To conclude the call, the first half marked another important milestone in Baladna's growth journey with strong financial and operational performance, continued domestic leadership, and meaningful progress on our international expansion. Our core business continued to demonstrate the resilience supported by disciplined commercial execution, ongoing product innovation, and the strength of our vertically integrated operational model. At the same time, we remain focused on advancing our international projects while maintaining the operational excellence that has consistently underpinned our success.
The right issue further strengthen our ability to execute these priorities, enhancing our financial flexibility and providing capital for next phase of growth. As we look ahead, our priorities remain clear. Strengthen our home market leadership, execute our international growth strategy with discipline, and continue creating sustainable value for our shareholders and stakeholders. Backed by strengthened capital base and a clear strategic roadmap, we believe Baladna is well-positioned to deliver sustainable growth for years to come. Thank you once again for joining us today and for your continuous interest in Baladna. I will now hand the call back to Phibion to begin the question and answer session. Over to you, Phibion.
At this time, I would like to remind everyone in order to ask questions, press star then the number 1 on your telephone keypad. We will just pause for just a moment to compile a Q&A roster. Your first question is coming from the line of Wei Chow with Al Rayan Bank. Please go ahead.
Hi. Good afternoon, everyone. Thank you for the call. I have three questions, please. The first question is on the Algeria and Syria project. Can you just refresh us on what is the progress as of now? When are these projects expected to be reflected in the financials? Second question is on the review contract of the evaporated milk. Can you let us know what are the new terms and volumes that are being contracted in the new contract? The third question is on the ice cream portfolio that you have launched. How is the takeoff that you are seeing, and what is the expected contribution going forward?
Okay, thank you so much for your questions. Let me answer one by one. The first question was regarding the international expansion for Algeria and the Syria project. As I mentioned during the call, both are moving as per the plan, and we have made a very strong progress. In Algeria, now we are in the construction stages for the factory as well as for our cow barn. Similarly, the arable farming is happening now. You may have noticed in some previous releases as well. Now we are greening the desert. Pillars are now there. Crops have been cultivated, and we are all set to import our cows in the fourth quarter from November onwards to start the next phase of the project. A lot of contracts to the different vendors has already been awarded, and they are working for the readiness of the machinery and plant as well.
On Syria, the project has kicked off a few weeks back. Now the construction has been started on ground. All the permits and necessary approvals from the government of Syria has been approved. On the other side of the construction of the factory, in parallel, we are working on the farm and the cow factory as well. Land has been acquired, and very soon we are going to start those projects as well. Now, moving to your second question for evaporated milk. The contract naturally similar to last year. The revenue is around QAR 110 million - QAR 120 million for the full year. Partly have already been provided to the government. Around QAR 30 million, QAR 35 million has already been given to the government, and the revenue has been recognized in the first half.
And we believe that this opportunity is going to stay there because we have been able to develop a unique capability and the manufacturing facility over the period of time in terms of our plant source. Moving to your third question, the ice cream business. Yeah, the momentum is quite high. The people are liking the flavors too much. And we have to be very honest, very much convinced that this is the next big business for Baladna in the coming year. Up till now, we have launched a number of flavors. All got a very good response from almost all ages of the consumers, from kids to the young and adult. Currently, it is through our import model, but with the response that we're getting from the market, management is considering that we might need to have a manufacturing facility for this business in-house in here in Qatar.
So right now it's doing very well.
All right. For ice cream, do you have a target market share in mind? And also, what are the margins like?
See, we believe it's around QAR 30 million - QAR 50 million revenue business for us. So let's see. Let's see going forward. Due to some supply chain issues that we are, I think all the region is facing right now. So the things are launched in small batches. But once the situation will be fine, I think a full range will be available with more stores in Qatar. And we perceive this business has a potential of QAR 30 million- QAR 50 million a year in terms of revenue.
Okay. If you don't mind, just one quick follow-up on the evaporated milk. Seeing that there's a 26% decline in the first half, can you let us know why? Is it going to pick up in the second half?
Yeah. Last year, the evaporated milk started from 1st January . In fact, December 2024. This year it has just started in April. So the impact is because of that quarter. It will pick up. Last year, the total revenue was QAR 108 million. This year it will be QAR 120 million.
Okay. Thank you very much.
Thank you so much.
There's no other question. Thank you at this time. That concludes our Q&A session. I will now turn the conference back over to Phibion for closing remarks. Please go ahead.
All right. Just before I close, I've got one question of my own. Just wondering what's happening with your Juhayna investment. I think last time, I think you mentioned that you're considering to exit it. What's the story there?
No, no such news we issued anywhere. We are just holding our investment there. As such, there's no plan to exit right now.
The holding, is it still around, I think it was around 15%, 16%.
16.3%. Yes.
16.3% . All right, thanks.
Juhayna is performing very well. Other than this currency devaluation issues that is related to the country itself, Juhayna's performance is fine. We have good returns on Juhayna. We just recently got around QAR 5 million of the dividend as well, and with their bonus issue, which is expected to hit our accounts by 8th of August. Business is doing fine. There is no such discussions under the way that we are going to exit.
Yeah. Okay. All right. Thanks for clarifying that. If there are no further questions, then this brings us to the end of our call today. Many thanks to you, Ghulam, for stepping in place of Saifullah. I would like to thank everybody that has attended and for the questions asked. Please do join us again in future. This brings us to the end of our call.
Thank you.
Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.