Thank you for standing by. Hello and welcome to Baladna. Please note that this call is being recorded. You will have the opportunity to ask questions to our speakers later on during the Q&A session. If you would like to ask a question by that time, please press star and the number one on your telephone keypad. I would like to hand over the call now to our moderator, Phibion. Please go ahead. Thank you.
Thank you. A good afternoon to you all, and thank you for joining us for Baladna's first quarter of 2025 earnings conference call. My name is Phibion Makuwerere. I am with QNB Financial Services. On today's call from the Baladna management team, we have got the CFO, Saifullah Khan. As usual, he will go over the performance, and we will have a question- and- answer segment afterwards. Let me turn over the call to Saifullah to begin. Please go ahead, sir.
Thank you, Phibion. Good afternoon, ladies and gentlemen. Welcome to Baladna quarter one 2025 earnings call. My name is Saifullah Khan. I serve as the Chief Financial Officer at Baladna. Thank you all for taking the time to join us today. The presentation materials have been shared in advance and are also available on our website if you have not taken. I keep my opening remarks brief to ensure we have ample time of question-and-answer at the end. Let me begin by providing brief introduction to Baladna for the new investors who joined first time on the call. As Qatar's leading producer of high-quality dairy and beverage products, we are proud to offer a trusted range of milk, dairy, juice, and food items.
Since our founding in 2014, we have built a robust foundation with large-scale farms, cutting-edge production, and packaging facilities that support our long-term growth and sustainability goals. Our vision is to become the leading provider of nutritious and healthy food and beverages in Qatar while expanding our reach into the new regional and international markets. We are committed to delivering long-term value and progress we have made this quarter reflects that commitment. With that, let us turn to our financial and operational performance for the first quarter of 2025. Moving on the first quarter performance, revenue for the quarter reached QAR 331 million , marking a 6% year-on-year growth. This growth was primarily driven by strong performance in the evaporated milk segment, continued contribution of newly launched SKU and additional 10 days of Ramadan sale.
EBITDA grew by 19%, supported by revenue growth, lower procurement cost, and operational efficiency across the value chain. EBITDA margin improved to 35% in comparing to 31% in same period of last year. We recorded a net profit of QAR 58 million during the quarter, representing a 21% year-on-year growth, driven by high revenue cost savings from lower procurement cost as well as good farm performance and operational efficiency, which helped offset the impact of increase in depreciation and finance cost. The net profit margin stand at 18% in quarter one of 2025. Furthermore, we delivered strong quarter-on-quarter growth compared to the previous quarter of Q4 2024, achieving a net profit increase of 32%. This performance was primarily driven by increased sales of EVAP milk, strong farm performance, and enhanced efficiency across the entire value chain.
In terms of cash flows, Baladna continued to demonstrate strong operating cash flows generation capability this quarter, supported by higher sales performance. This was partly offset by an increase in CapEx and investment activities and finance costs. We maintain a disciplined approach towards capital allocation. Our CapEx and investment levels remain elevated as we continue to prioritize expansion and maintenance CapEx and strategic investment in line with our robust investment policy. Furthermore, we received 2024 government subsidy for QAR 105 million in early of April this year, which has further strengthened our cash flow position for the rest of the year. Dividends. Based on the financial performance of 2024, Baladna approved bonus share of one share for 19 shares amounting to 100 million shares, further enhancing shareholders return while preserving cash for the future growth.
Domestically, we are proud to report that we have started generating significant revenue from New Plant 4, a state-of-the-art facility and QAR 100 million government contracts, which was awarded last year, quarter four, to supply evaporated milk. Production is now underway at our state-of-the-art facility, making a major milestone in our efforts to enhance Qatar food security and diversify our product portfolio. Turning to our strategic initiative, Baladna has made strong progress on its integrated agriculture and dairy project in Algeria. This will be one of the world's largest integrated dairy farms in the world. We successfully signed a definitive agreement with Algerian Ministry of Agriculture, along with 20 years of take agreement with the Office National Interprofessionnel du Lait et de Produits Laitiers, ONIL, which is the subsidiary of the Ministry of Agriculture.
Baladna Algeria, spanning across 117,000 hectares in Adrar province, is 51% owned by Baladna Trading and Investment, a wholly-owned subsidiary of Baladna QPSC, aimed to meet Algeria's demand for powdered milk. Baladna Algeria is officially established now. The board of directors, with majority of members from Baladna, along with the senior management team, have been appointed. The project is aimed at fulfilling Algeria domestic powdered milk needs, while also supporting the growth of the local red market supply, creating jobs, and expanding national cattle populations. Early groundworks, including exploration of wells, land studies, and awarding the major tenders are already underway. Now turning to operational highlights for the quarters. In Q1 2025, Baladna continued to strengthen its operational foundation through strategic investment, product innovations, and enhancing efficiency across the value chain. Government tenders for evaporated milk remain a key growth driver, reinforcing Baladna leadership in this segment.
These initiatives are directly aligned with the advancing Qatar food security self-sufficiency goals and enhancing national food security by reducing reliance on imports. Innovation remained a core focus area. During the quarter, we successfully launched 11 new SKUs across our yogurt, Greek yogurt, drinks, high protein milk, eleven segments, and further expanding our product portfolio and strengthening our market offerings. As Baladna's leading food manufacturer and distributor, we continue to provide exceptional services across both Retail-TT and HORECA channels. In the first quarter of 2025, HORECA revenue grew by 26% year-on-year, driven by strong demand from hotels, restaurants, cafes, and government Tamween tenders for EVAP milk. Retail-TT posted a steady 2% increase, reflecting a healthy consumer demand at local outlets. While retail key counts declined slightly by 1%, our strong partnership helped maintain segment stability.
Overall, total revenue grew by 6% compared to the same period of last year, reaffirming Baladna market leadership and growth momentum. Looking ahead, our strategy will continue to focus on growing key product categories and increasing our market share in high potential segments. We will keep innovating new products to meet changing consumer needs, using advanced technologies to further improve our existing products, supporting both operational efficiencies and long-term growth. We are also building on our success in Algeria, where our strategic plans are designed to deliver value to shareholders and expand our global presence. Financially, we will stay focused on cost control, improving operational efficiency, and expanding our channels and product offerings to sustain top-line growth in the coming quarters and beyond. In conclusion, Baladna is well-positioned to maintain strong performance as we start the new financial year.
Our focus on innovation, operational excellence, and strategic growth will continue to drive our success. Thank you. With that, I open the floor for question-and-answers. Please, if anyone has any questions, I am happy to take it.
Thank you. At this time, I would like to remind everyone that in order to ask a question, press star then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Okay. So your first question comes from the line of Wei Chow with Orion Investment. Please go ahead.
Thank you, gentlemen, for the presentation. This is Zohaib Parvez from Orion Investment. I have got a few questions. First, the growth that we see in the dairy sales. This, as per your chart on 14, it seems like all the growth is related to the new business, which is the evaporated milk. Is my assumption correct?
Good morning, Zohaib. How are you?
I am good. How are you?
If you see this, we reflect if you see by category performance, and you can get a sentiment how much is coming from EVAP and how much is coming from the rest of the categories. Yes, high contribution remained from EVAP, but still we maintain the fresh milk, UHT, and yogurt and laban also, we maintain our growth on that. The challenge was mainly in two categories, the cheese and the juices, where I think the competition is entering also in the market. That was only the two categories where we were having challenge. But yeah, there is a contribution from other major categories.
Okay. On the evaporated milk, you have mentioned that your production capacity is, I think, 198,000 tons. What is the current utilization for this?
At this stage, we are running EVAP factory. The plant is the state of the art. It's not only accommodating EVAP, we have other lines we are adding to this plant. If we talk about EVAP capacity, it's at one shift only. We still have a huge capacity in EVAP line, yeah. We can go to the second shift. We are now, I think if you see, in the HORECA especially, our sales team, our target how to enhance. In the HORECA, they are entering to the different contracts with the HORECA customers to increase our sales. Similarly, we are pushing in the retail also, though you have a very tight competition on this. But it's moving very well on the retail and HORECA is big time.
Okay. The QAR 27 million, how do you see this planning going forward in the first, for the remaining nine months of this year? Do we see quarter on quarter increase or do we see that this is probably where going forward for the near future it should remain?
Yeah. There will be a growth because now the government tender is, we have said that it's QAR 100 million for full year, and it started from January somewhere, I think first week or second week. The addition will come from HORECA and the retail, where we are growing our shares. The growth will come from HORECA and retail.
Okay. Great. Thank you. I have got two other questions. One is on the gross margins. Could you give us some color on what is leading to the growth in margin, gross margin? They expanded significantly in this quarter. My last question is on, in your cash flows, I see that you have purchased some equities. As I understand, these equities or fair value through P&L securities are mostly for Juhayna. Have you purchased a more stake in Juhayna for QAR 26 million?
Look, we have two securities now. The way we are having is one market is Egypt market, where primarily we are investing in Juhayna. The second is Qatar market, where we are buying different stocks. We are trying to make this how we can improve the profitability of available extra cash. This is mixed with the Egypt and the Qatar. If you are seeing, the portfolio is almost, you can say it is 50/50. The measure is, I think this both is mixed. Return is also coming on the mix from the both market. Your first question about GP. I mentioned that GP is basically first element is our growth on the top line is adding, and second is the overall material prices. The procurement strategy working very well, I think.
What we are trying to materialize our long-term contracts, how to best buy in the right time in the season, which really helping our material cost. The third thing is operational efficiency across the business. As business is getting mature, I think overall we are seeing efficiency in production. Our farming business also is giving us better yield, and they are giving us the low cost per liter. That is also helping in the overall GP margin have.
Okay. Sounds good. Thank you, Saifullah. Thank you.
Thank you, Zohaib.
Again, if you would like to ask a question, press star then the number one on your telephone key. Your next question comes from the line of Mohit Singh with Lesha Bank. Please go ahead.
Hi, I am Mohit from Lesha Bank . I have a question on evaporated milk. Again, coming back to that. I think you mentioned the contract from the government is of QAR 100 million. Is this for 2025 or is this something recurring or how should we look at it?
This contract normally, Tawtheeq, awarded yearly basis. This contract is for one year only, 2025. Basically every year we have to participate in the tenders and we have to win commercially this tender every year. This is first time Baladna is producing, and as I said, we are optimizing our facility and we are optimizing our costing, and then it is helping us to be well-prepared on the coming tender as well. Basically, this is year on year starting to have this tender. This is something not new. This first time they awarded the local companies. We believe, as a Baladna management, that the country is supporting the ICV big time in country value, where they are giving a very high score to the local producer.
That will be a further value added when we will go for the coming future tenders as well.
Okay. Got it. I think last quarter it was just, I think, 1 million, this is 27 right now. Is it safe to assume that of the QAR 100 million, I think if you divide it by four, is it mainly coming from the government side of it?
Yes. At this stage, you can say this. As I mentioned that our sales in the market through HORECA channels and the retail, we are promoting this big time now. The government tenders is okay. You can say that quarterly it will be more, a number will be fixed. But the major growth will come from our retail and HORECA business.
Got it. Thank you so much. Just one last on the Algeria project. I think there's just light on that focusing, like giving out the details of the project. Just to understand the cost of debt is 1% of the debt amount that is mentioned. Is my understanding right?
Yes. Mohit, you are right. But we disclose project. This is project where the arrangement has been done with the Algerian government. 51% debt will be locally raised by the help of Algerian government at the rate of 1% subsidized interest rates to compensate this project. Yeah.
Okay. Regarding, let's say, I think by when do we expect it to commercialize as in yielding revenues and those sort of metrics for the Algeria project?
Algeria project, at this stage, we are already groundbreaking activities started, company already established, board, managements. Work already started on the ground. We are anticipating that, which we have a commitment with the government for this offtake agreement, that from year 2028, full year should be having production year.
All right. It will be consolidated on Baladna's financials. How should we look at it in terms of accounting of the numbers?
Yes. 51% shareholding in the equity and having majority in the boards and on the managements from our side, we have full operational control. Yes, it will be fully consolidated in Baladna.
All right. Thank you. Thank you, Saifullah, so much.
You are welcome, Mohit.
Your next question comes from the line of Nikheera Potani with QNB FS. Please go ahead.
Yeah. Thank you, gentlemen. I came a little bit late, so maybe I do not know whether this question has been asked, but actually this is regarding your other income and actually the gains on investment at fair value through your profit and loss statement. You have shown a gain of almost around QAR 11 million in the first quarter. While you do not flow it through your other comprehensive income, any other value of that. But overall, on the balance sheet side, we see a quite good expansion of close to QAR 35 million- QAR 40 million. So wanted to know how do you account for the rest? I mean, where it goes. The difference between QAR 35 million, QAR 37 million and QAR 11 million, which we are seeing in the first quarter.
Yeah. Basically, what you are seeing, the balance sheet, we increased our investment in the equities. So basically, we invested more during the quarter. So the fair value gain, what we are seeing very consistent now, and we are seeing this is even April, things are moving well ahead from our expectations. So that is what we are seeing. The difference is real investments.
Okay, so you are saying new investment has also been provided in the first quarter?
Yes. During this quarter, we bought more equities. Yeah.
Saifullah, may I ask, I mean, in your annual balance sheet, you mentioned about Qatar and Egypt is a focus, right? As of now.
Yes. Yes, exactly.
Okay. So wanted to understand, I mean, are the plans, I mean, to further increase or, because it is quite a substantial jump, suppose we look at it over a period of 2 to 3 years. So you further plan to increase it further and further? I mean, or you could be seeing profit booking coming into picture in case of first in the year as we go forward.
Yeah. Look, this was based on the availability of the excess cash, our delay on the international projects. Now we can see that on the grounds project of Algeria is already started. So we believe that now that most of the excess or some will go to the Algeria, it is not our strategic plan that we will enhance, but it depends on the profitability, and which we are expecting now more profits is coming from these investments. And definitely in the future, we will be materializing that profit as well. So it was timing because when we were delaying on the project of Algeria, now we are moving to Algeria, so it will be less focus on this investments on the equity side.
Okay. Yeah. Thank you, sir.
Thank you, everyone, and that concludes our Q&A session for today. I will now turn the call over back to our moderator, Phibion. Thank you.
Thank you. Yeah, it brings us to the end of the call today. I would like to thank all of you for joining us. Please do join us for the 2Q call. Also special thanks to the CFO, Saifullah, for taking his time to update the market. Enjoy the rest of your day.
Thank you. Thank you, everyone. Thank you.
Thank you, everyone. That concludes today's call. Thank you all for joining. Have a nice day ahead.