Earnings Call: Q3 2021

Oct 21, 2021

Quarterly report

Please go ahead. Hi. Hello, everyone. This is Bobby Sarkar, Head of Research at QMB Financial Services. I wanted to welcome everyone to Wukud's 3rd quarter 9 months 2021 results conference call. So on this call, we have Pradeep Kumar, who is the CFO at Wukud Sultan Al Madid, who is the Finance Manager and Mafaghil Jariwala, who is the Treasury Head and IR Officer. So we will conduct this conference with first management reviewing the company's results followed by Q and A. I would like to turn the call over now to Mafadil. Mafadil, please go ahead. Thank you so much, Bobby, for the wonderful introduction. Good day to all the participants, and we hope everyone is keeping safe and healthy. We welcome you all to Gokul's 9 months ended September 2021 results conference call and appreciate your participation as Gokul is committed to continuously enhance its Investor Relations initiatives. This is in order to strengthen our communication and improve transparency with all members of the global investment community. The presentation of this call will be available on the Investor Relations section of our website. Any statement that refers to expectations, projections, guidance or any other characterizations of future events, including financial projections or future market condition, is a forward looking statement based on the assumptions today. Actual results may differ materially from those expressed in these forward looking statements. The company cannot disclose any commercially sensitive information due to the confidentiality agreements signed with our suppliers. Please refer to Slide number 2 for the full version of disclaimer statements. All figures expressed in this call are in Qatari Riyals and the conversion for the same to U. S. Dollar is Qatari Riyals 3.64 to 1 U. S. Dollar. Now I would like to hand the call over to our Finance Manager, Mr. Sultan Jafim Al Mahdi, to provide a brief overview of Kukud and update on the key operational activities. Thank you, Mukazal. Hello, everyone. Thank you for joining us today for the conference call for Hoot. The key vision for Hoot is to be the leading petroleum product distribution company in the region. I am on Slide 4 now, which shows the overview of Wahoos Group. Wahud started operation in 2,002 with exclusive rights for storage and distribution of petroleum products in the state of Qatar. Operation started with 2 Petro Station in 2003, and we have grown to 110 stations as of end of September 2021. The chart on the right shows Wahud's station network. Wahud also operates 13 Bahas center for inspection of vehicles. Turning to Slide 5, which shows key operation of Fahud Group. Key operation of Fahud Group are diesel and gasoline fuel sales distribution, jet fuel sales, short to ship and ship to ship bunkering, SPG sales and distribution, natural gas and CNG sales and distribution, fuel bunkering, bitumen operation, CStur and auto care activities. Turning to Slide 7 now, which shows the diesel and gasoline fuel sales volumes and price trend analysis. As was mentioned before, the core activity for Hud is fuel sales and distribution in the state of Qatar. For the 9 months ending September 2021 versus the same period of last year, These sales volumes were higher by 6%, driven by macroeconomic factors. Combined sales volume were up by 10%, driven by market demand and easing of restrictions. Average fuel price were higher by 26% year to date September 2021. The diesel and gasoline chart on the top shows the trend over the past 5 quarters. Diesel sales for the quarter were up 9% compared to the previous quarter. Combined gasoline sales for the quarter were up 5% versus previous quarter. This improvement was driven by easing of restriction and market demand. Turning to Slide 8, which shows the jet fuel sales volume comparison. Jet fuel sales were higher by 12% for year to date September 2021 compared to same period last year, driven by easing of COVID-nineteen and the air travel restriction in many countries. Sales for Q3 of 2021 increased by 41% compared to the same quarter of last year and 90% versus previous quarter. That is driven by improved uptake from airlines. Combined sales volume of all petroleum products increased by 10% year to date September 2021 as compared to the same period of last year. The combined sales volume for Q3 2021 increased by 60% on a year on year basis and 12% quarter to quarter basis. Turning to Slide 9, which shows the retail fuel sales volume comparison with year to date September 2020. Retail fuel sales volume at Petro Station were higher by 9% for 9 months ending September 2021 versus of the same period last year. Turning to Slide 10, which shows retail fuel sales volume quarterly trend. For the Q3 of 2021 versus the previous quarter, retail diesel sales increased by 8%. Retail gasoline sales increased by 6%. Overall, retail fuel volume increased by 7%, which driven by market demand. We would like to share some additional information on other business segments for 9 months 2021 versus the same period of last year. Natural gas sales increased by 23%, driven by market demand. Diesel bunkering sales increased by 28% driven by the market demand. Lastly, non petroleum retail segment increased by 2% driven by infrastructure development. Now I would like to hand over the call to our CFO, Mr. Pradeep Kumar to discuss the key financial results. Thanks, Tulkarn for all the volume updates. Good day, everyone, and hope everyone is safe and healthy. Now I would like to discuss the consolidated financial results of Workhorse for the 9 months ended September 2021. Turning to the revenue, I'm on Slide 12 now, which shows the revenue trend of Vokode. Revenue from fuel sales account for nearly 95 percentage of the total revenue. Vocode achieved total revenue of CAC13 point 6 billion during the 9 months ended September 2021 compared to Kadriere R10.2 billion during the 9 months ended September 2020, showing an increase of 34%. The main reasons for the increase in revenue are increase in sales volume by 10 percentage and increase in overall prices by 27 percentage. As compared to Q3 of 2020, the revenue for the Q3 of 2021 is higher by Cattera real RMB2.3 billion, representing an increase of 70 4 percentage, mainly driven by increase in prices. Turning to Slide 13, which shows net income trend. Gokot has made a net income of Cather Real R691 1,000,000 for the 9 months ended September 2021 as compared to Cattere Real's RMB 429 1,000,000 during the same period last year, increase of 61 percentage. This was mainly driven by higher sales volume and increased in fuel prices. Improvements in non fuel segments also has the increase in net income. The detailed analysis of net income variance is given in next slide. Slide 14 shows the key variance analysis of net income for the 9 months ended September 2021 against the same period last year. The increase in net income of €2,000,000 is due to following major factors. Gross profit, which is net of non controlling interest, increased by caustaria's €264,000,000 mainly driven by increase in fuel sales volume and increase in fuel price. General and administrative expenses lower by Qatar Riaz 20,000,000 driven by cost optimization and efficiency improvements. Other income lower by category as RMB22 1,000,000 due to lower dividend interest income driven by prevailing market conditions. Vukor's fundamentals are very robust and Vukor is committed to meet all its strategic goals while placing safety as a top priority. Vocos has taken all necessary measures to ensure the safety of employees and business continuity during this pandemic situation. Cocoon has a strong leadership committed towards delivering the results to the shareholders. With this, we are ready for the Q and A session. Thank you. Thank you. We will now take our first question from Mujid Moza from Commercial Bank, Qatar. Good morning, Mr. Pradeep and welcome team. This is our presentation. I just have 1 or 2 follow-up questions on the presentation. The last two quarters trend is seeing a good traction in pickup in the uptake of the fuel, the gasoline fuel. Just want to know even on the aviation pool that reasonably good uptake that you've seen. Heading towards the period where this post pandemic where we are seeing demand recording back into the travel restrictions being taken off, What is the outlook on both the aviation fuel as well as the gasoline fuel and the volume sales likely to contribute to better numbers in the coming quarters? Just one question. 2nd question is on the fact that Wacku is now looking for further expansion even into next year, but going forward, are there any cross border opportunities being explored now that we are seeing some traction in cross border investments happening? What could looking for any opportunities across the border to seek growth opportunities? Thank you. Let me answer the first question, which is the demand for jet fuel. As you can see, the latest trend, if you talk about September, we are almost 82 percentage of pre COVID situation. So we expect that this is going to improve in the coming months. As we can see that quite a lot of countries are easing the travel restrictions that will definitely benefit the jet fuel segment. Regarding gasoline and diesel, it's mainly related to the activities in Qatar where you know now schools and everything is back to normal, office are fully staffed. So we believe definitely the demand is going to improve in the coming months. Regarding your second question on cross border opportunities, Okudi is looking for right opportunities for expansion. And once we firm up anything, we'll definitely announce in due course. Thank you, Batya. Just a follow through question. With regard to the outlook on the next quarter, the performance that is in the 3rd quarter, can that be taken as a normalized quarter for the growth or we can expect further growing quarters as the quarter comes by the volume sales push and with the margins remaining flat, the actual contribution in terms of profitability, the outlook will be much better as we move into the next few quarters? Just a follow-up question to the first one. Well, as you know, we said about the demand side of it. Rest of the things, I'll let you work on the number side of it. Definitely, we expect the demand going to improve in coming quarters. Okay. Thank you, We will now take our next question from Mr. Darrginaax from Alfresil. Please go ahead. Yes. Good morning to you. I just would like please an update on CapEx outlook for 2022, please. Thank you very much. [SPEAKER MOHAMMED ABU GHAZALEH:] And the CapEx, we are planning for expansion adding another 20 11 stations in 2022 to meet the requirements. And we are also working to meet all the requirements for 2022 work, how it's going to happen next year. So towards that, we are working on all the CapEx side of it and all the reliability improvements that we need to do in this country. So I mean for Fovacode, which was kind of the slight delay due to all the COVID situation where work was a bit slow, but definitely we will be catching it with all the work in the coming quarters. Thank We will now take our next question from B. Joy Joy from QIC. Please go ahead. Thank you, gentlemen for the call. My question is on the jet fuel side. So we can see that the volumes have almost picked up to the same levels at Q1 in 2020. But from a profitability angle, it's like almost 20%, 25% lower. So has there been a pricing change or margin reduction in the Jet Fuel side? Thanks. But if you're comparing to the Q1, you need to understand we have 1st quarter, there are a lot of other incomes like dividend, etcetera, which we received during the Q1 that gets accounted. But if you normalize for the dividend and everything, you can see our profitability improving quarter on quarter. No, what I meant was basically Q1 of last year 2020 in terms of volume trend, it's almost at the same level, probably 77,000,000 liters less, but almost at the same level. But on the profitability from the jet fuel segment, it's still lower, 20%, 25% lower because jet fuel used to make when I compare with your jet fuel numbers, it looks like 20%, 25% lower. So from a pricing angle, I have that doubt that is the pricing still the same or the margins you're making still the same or it's lower than last year? Hey, Vijay, don't know where you're quoting the numbers from. What I stated is still valid, cannot compare Q1 with any other quarters. First quarter has its own specific income such as dividend, which we account in that quarter. And when you compare, it's improving quarter on quarter. Definitely, the volume improved, so as our income also improving. Okay, perfect. Thanks. We will now take our next question from Zohit Kavez from Iranian Investment. Please go ahead. Thank you, General, for the presentation. I have more of an outlook question on how do you think next year, you've got the World Cup, this year, you've got the Aero Cup. Which sectors do you think are going to benefit Vukud? How would these 2 big events help Vukud in financially or operationally? [SPEAKER PIERRE YVES LESAICHERRE:] On the operation side, it's our responsibility to make sure that we meet all the requirements late into these events. Financially, we're looking forward to all the opportunities associated with the events, so we can capitalize on the same and improve our results wherever possible. Thank you. So did you know which could you like give us some color on which segment do you believe is probably going to benefit within WACCOW? Like, is it going to be retail sales, is it going to be jet fuels, petroleum? Which one do you think you plan on or do you expect to be improving in because of these big events? Thank you. We expect all segments going to benefit from this one, but definitely retail will take the lead in that, although Jet Fuel and all those segments will certainly benefit from this one. Thank you. We will now take our next question from Mohammed Adel from Alfaisal. Please go ahead. Hi. Thanks for taking my question. So my question is about the CapEx. So you said you if I heard you correctly, you said you will have next year another 11 stations. Is there any electric supercharger in this station? And what is your plan for like electric charges? This is one question. My second question is also on the CapEx on the amount. You said the level is sufficient, but I didn't hear maybe I don't hear correctly. Did you disclose any amount? How much is the CapEx in the next year? Thank you. Regarding the EV segment, yes, definitely that's a segment we believe there will be a growth in future and we are working with all the stakeholders to tap the opportunities associated with that segment, which you will hear in the course. Now regarding the CapEx, we believe it's go back to somewhat that 2019 level for the reasons that we mentioned. So that's kind of our expectation at this level. Thank you. As there are no further questions at this time, I would like to turn the call back to your speakers for any additional or closing remarks. Hi, guys. This is Bobby Sarkar again from QNB Financial Services. If there are no further questions, we can end the call for this quarter. I want to thank Code Management for taking the time to answer questions from investors, and we will pick this up next quarter. Thank you so much. Thank you, Bobby. Thank you, and thanks to that, Indi. And we'll see you in the next quarter. Thanks, Bobby.