Hello everyone, and welcome to Baladna conference call. Please note that this call is being recorded. I would now like to hand over to our moderator for today. Phibion, you may now begin.
Thank you, Ellie. Good afternoon to you all, and welcome to the Baladna conference call for the third quarter and nine months 2024. From Baladna's management team, we have Saifullah Khan, who is the CFO. He will go over the presentation first, and then we will have a Q&A session afterwards. Let me turn over the call to Saifullah to begin. Go ahead, sir, please.
Thanks, Phibion. Good afternoon, ladies and gentlemen. Welcome to Baladna third quarter 2024 earnings call. My name is Saifullah Khan. I am the CFO of Baladna. I appreciate your taking time to join us today as I walk you through our financials and operational performance for the nine months ended 30th September 2024. The presentation material have already been shared in advance and will also be available on our website. I will try to keep this call short to provide more time for question- and- answer session. Let's begin by looking at the financial performance. I am pleased to report that Baladna has once again delivered strong results in third quarter of 2024, reflecting our ongoing commitment to growth and operational excellence. Year- to- date, revenue reached QAR 859 million, which equivalent to 11% increase compared to the same period of last year.
This was driven by increased sales volume across our core product categories and robust performance in both Retail and HORECA channel. Net profit for nine-month period came in at QAR 141 million, marking an impressive 118% year-on-year increase. Our focus on cost management and operational efficiency continues to pay off, with net profit margin improving from 8%- 16%. Additionally, we benefited profit from our international activities, especially from investment in Juhayna Food Industry in Egypt, and saving in finance cost through effective negotiation. In terms of EBITDA, we saw 24% increase year-on-year for nine-month period, reaching QAR 286 million, representing an EBITDA margin of 33%. This is a testament to our disciplined approach to cost control and operational efficiency across the value chain. In terms of EBITDA margin, Baladna continues to outpace its regional peers.
Earning per share also saw a notable increase of 118%, indicating our success in translating growth into value for our shareholders. Along Q3, revenue reached QAR 264 million, reflecting 3% increase year-on-year. Net profit grew 82%, showing the continued benefits of disciplined financial management and cost control. EBITDA saw a 24% improvement, rising to QAR 90 million, supported by the same cost saving measures we have discussed earlier. The key driver for Q3 results mirror those of our YTD performance, such as strong market share growth and operational efficiency. As expected, quarter-on-quarter performance saw some softness, with revenue down by 6% and net profit down by 22%, primarily due to seasonality, a recurring theme across the business cycle.
In terms of cash flow generation, Baladna continues to emphasize effective working capital management and has implemented stringent controls over CapEx through rigorous investment analysis and robust business viability assessment. For the nine-month period, company generated free cash flow of QAR 232 million, which has enabled us to finance dividend payment through internally generated cash flows. Now, let's turn to some of strategic development we made this quarter to strengthen our business. We secured a QAR 100 million government contracts for production and supply of evaporated milk for 2025. A clear demonstration of our pivotal role in supporting Qatar long-term food security efforts. Talking about Algeria project, we are making excellent progress. We commenced preliminary works in our integrated dairy farming project and signed a shareholder agreement with Algerian National Investment Fund, securing a 51% stake in the company that will establish and to execute the project.
These two developments together mark a significant milestone in our regional expansion and open the door for future growth in Algeria. We are also pushing forward with plans to establish an infant milk production project in Algeria, a strategic move that complements our existing milk powder production initiatives and will enhance our product portfolio. Finally, we continue to expand our dairy and juice portfolio with a focus on innovation. This quarter portfolio expansion reinforced our leadership in the market and drive home our commitment to delivering superior products to our consumer. Let's now move to discuss our operational and commercial performance. In terms of channel performance, we saw balanced and robust performance across key channels, reflecting the strength of Baladna diversified approach. HORECA demonstrated a robust 9.5% growth year-on-year, driven by continued demand from hotels, restaurants, and cafe, as market dynamics in Qatar remain favorable.
In the Retail-Key Accounts segment, we recorded an 8% growth supported by our partnership with large scale retailers. Meanwhile, the Retail-Traditional Trade channel deliver 8.8% growth, reflecting consistent consumer demand at our local retail outlets. We have continued to build on our operational momentum with clear focus on expanding market share, introducing innovative products, and deepening customer relationships. Our overall market share saw a steady increase to 54.4%, driven by strong sales volume across the majority of dairy segment, reflecting the strength of our brand and consistent customer demand. We have also expanded our product portfolio, introducing 40 new SKUs to year-to-date. This includes our new lines of Hi-Protein milk and yogurt, Greek yogurt with new flavors, and an enhanced juice portfolio with revamped packaging. These innovations further cement Baladna market leading position in the dairy and juice segment.
Looking ahead, we remain focused on driving sustainable growth and creating long-term value for our shareholders. We will continue to build on the momentum in Algeria, where our strategic initiatives are on the track to deliver shareholder value. The upcoming infant milk production project is particularly exciting, complementing our existing portfolio and expanding our footprint in the region. In product development, we remain committed to innovation with plans to introduce new products that respond to the evolving consumer preference and continue to capture market share. We will ensure that our products quality remains second to none. On the market front, we are prioritizing national food security and diversification of our business. This includes making sure our products are available consistently with operational efficiency being a key area of focus to meet rising demand.
In terms of financial performance, we will continue driving bottom line growth by focusing on cost control and operational excellence. Expanding our channel and product categories will be pivotal in sustainable our top line growth through Q4 and beyond. At the end, Baladna remains well positioned to continue delivering robust performance as we enter the final quarter of 2024. Our focus on innovation, operational excellence, and strategic growth initiatives will be key to sustaining this momentum. Thank you. With that, I will open the door for questions.
We are now opening the floor for question and answer session. If you'd like to ask a question, please press star one. As of right now, we have a question from Ariana Zarrabian from Ashmore Group. Your line is now open.
Hi. Thank you very much for the presentation. I just have two questions. Firstly, what drove the market share growth of around 4% increase? I just wondered whether this was to do with the increased capacity due to the launch of Plant 4? Then my second question is, would you mind shedding a bit more light on the decision process, through which the government subsidies get renewed? Is there something also similar planned for the Algeria project going forward? Thank you.
Thank you for your question. Your first question about the growth drivers. The key drivers is the overall market share growth of Baladna, which is Baladna consistently increasing the market share, which driving the volumes also, higher volumes. The second thing is also the price increase of last year after July, when we did it. These are the key drivers and bringing more products to the market and which helping our volume increase. Your second question about the government subsidy is planned for up to year 2027. Being a strategic company and helping government food security. We are expecting that in any form of support from the government should remain for this business to be sustainable, to be competitive in this region. We cannot discuss at this stage because still we are another three years.
That committed government compensation as per the agreement is already there. We hope once we reach to that stage, there should be a continuation of any form of the government support to the business.
Okay, thank you so much. Would you mind just giving me a bit more detail on plant four? Is this fully operational? I understand that it soft- launched last year?
Yeah. What we did so far, soft- launched the Evaporated Milk, EVAP, our product is available in the market. We did it for retail market, and we are now trying to approach HORECA customers. Already across the country our base is there. We are introducing these new products to the HORECA customers and with a new tender of QAR 100 million which we awarded. I think our current Plant will be fully operational in the December month. We can say the next year, this Plant will be fully operational, yeah.
Okay, thank you very much.
Your next question comes from the line of Aashish Agarwal with The First Investor. Please go ahead.
Yeah. Hi, Saifullah. Hope you are doing good, and congratulations on your results. Can you offer what is the EBITDA margins that is likely to be secured on this government contract? That is my first question. Are you in position to throw some light to the market about the funding plans, like the CapEx outlook, and how do you plan to fund for the Algerian project? Those are my two questions. Thank you.
Okay. Thank you. Regarding EBITDA margin, Aashish, you asked about specifically for the EVAP. EVAP is basically a long life product and the long life products, normally margins are less compared to fresh products. We are expecting from this at least 20% EBITDA margin from that product, because this is where we are. Business is very competitive as a market to enter to the way the players who are sitting in the market like Rainbow, for year-on-year . We need to capture our market share. So we are entering with a lower margin on this product with the retail market. Gradually we have a plan how we will grow in the market, increase our market share. When it comes to the, y eah, your funding of the CapEx Algeria project-
Before we, s orry to interrupt. Before we move to that, just one quick follow-up. This 20% EBITDA margins, is it a bit on a discount for the government or assuming if this was not a government client, could this have been a bit higher?
Yeah. If I compare with the retail margin, I think it is a bit higher because the tender is a bit competitive. This tender is going on year-on- year. There was-
What could be the difference?
The difference-
What could be the difference?
I think the difference between at least in the 10%-20%, I don't have exact number because as a market, we can compare with the market and what the tender. Tender, it was very competitive, and we won from the competitive offering in the tender. That's why the margin is not very high, but it's helping overall the top-line growth and also the operational, the cost, we don't have any fix overheads of the operational side except the raw materials and all this.
Right.
Yeah.
Fine.
Is it okay? Your question is answered?
Yeah, that's helpful. Yeah. The first question is answered. That's helpful. Thanks a lot for that.
Second question you are asking about CapEx?
Yeah. When do you plan to start infusing capital? I understand possibly you may still not want to disclose it, but I leave it up to you.
Yeah. But I think the things are moving very fast track in Algeria. Team is sitting there. They are working with the relevant ministry, and the testing of the soil is going on underground. We have eight wells already planned on the soil to ensure the soil quality and water availability underground. The consultant teams are working on the ground right now because once land is confirmed, execution will start immediately. Then the one or two agreements with the definite agreements is already in under discussion shareholders. We already signed. We got alignment with across how this management of the project will be done by Baladna. So we have a 51% majority in the Board.
On the funding side, as soon we will incorporate the company and to assist in the discussion all the articles of association and other few agreements. Funding we are planning to have for specific because the project itself have a 51% funding locally from the bank, which is coming from the government side. We have to inject only the equity from Qatar. Okay? Taking 30% from Qatar. We do have a plan how we will secure our debt to equity structure in the long term, because project is in the long term. Initially we will inject, because we have a surplus cash flow in the business, but we will be more not disturbing our operation at all, because we need to make sure our shareholders are happy and
True.
We will start-
Sorry to interrupt. Given that I understand it's a huge project and there are obviously every chance of a small delay here and there. Could I look at it from this way, like the middle of 2025, could that be a good starting point to assume cash outflow from Qatar for this project?
No. For this project, we are planning end of this year. So far plan is end of this year. It can only go to first quarter of next year maximum. That's where we are.
First quarter of next year maximum? Understood.
So far plan is end of this year. But yeah, maybe it can drop to first quarter, but this plan is end of this year.
Understood. That is very helpful. Thanks, Saifullah.
Yeah.
If you'd like to ask a question, please press star one on your telephone keypad. That's star one on your telephone keypad. We will pause for a brief moment to wait for the questions to come in. As of right now, we don't have any pending questions. I'd now like to hand back over to Phibion for further remarks.
Thank you, Ellie. Thank you all for joining us this afternoon for Baladna's 3Q nine months conference call. Please join us for future calls. I also like to thank Saifullah, the CFO, for taking his time to update the market and respond to questions. It brings us to the end of the call. Have a good day.
Thank you, everyone. Thank you. Have a good day.
Thank you for attending today's call. Have a wonderful day. You may now disconnect.