Saudi Arabian retailer BinDawood posts 5.4% rise in first-quarter profit on higher revenue

Revenue increased 4.5% as pandemic-related restrictions on Umrah pilgrims were lifted and the school term began

BinDawood Holding operates 78 shops across Saudi Arabia under the brand names BinDawood and Danube. Photo: BinDawood Holding

Saudi Arabian supermarket retailer BinDawood Holding's first-quarter profit rose 5.4 per cent on higher revenue driven by the start of the school term and the easing of coronavirus-related restrictions.

Net profit after zakat and tax increased to 65.5 million Saudi riyals ($17.5m), up from 62.1m riyals in the first quarter of 2021, the company said in a filing to the Tadawul stock exchange on Monday.

First-quarter revenue climbed 4.5 per cent to 1.175 billion riyals as the BinDawood Haramain stores, located in Makkah and Madinah, benefited from the government lifting restrictions on Umrah pilgrims, the company said.

Its profit was below analyst estimates — SNB Capital and consensus estimates stood at 72.3m riyals and 71.1m riyals respectively. However, revenue was line with SNB Capital's expectation of 1.16bn riyals.

“We are finally beginning to see a marked improvement in trading,” Ahmad BinDawood, chief executive of BinDawood Holding, said.

“Greater freedom of movement for the local population has led to higher consumer spending in general, and more specifically, an increase in footfall through our stores.”

Saudi Arabia's economy, the Arab world’s largest, is expected to expand 7.7 per cent in 2022 as pandemic-related uncertainty recedes and oil prices trade higher, private equity and investment group Jadwa Investment said. The International Monetary Fund expects the kingdom’s economy to grow 4.8 per cent.

BinDawood, which runs a total of 78 stores, said expenses rose to 312.8m riyals in the first quarter, up from 288.6m riyals in the same period last year. The year-on-year increase reflected the impact of store openings during 2021, it said.

Rental relief of 17.1m riyals offset the increase in operating expenses and the lower gross margin, the company said. Gross margin of 32.6 per cent in the first quarter was lower than the 33.2 per cent margin in the prior-year period following resumption of the regular marketing campaign schedule, it said.

“The company’s financial position continued to be strong with no bank debt,” it said.

Cash generated from operations in the first quarter rose to 420.1m riyals, compared to 214.6m riyals in the fourth quarter of 2021.

As of March 31, 2022, the company had a cash balance of 778.6m riyals, an increase of 60.8 per cent compared to December 31, 2021.

BinDawood Holding, which signed a definitive agreement for the acquisition of International Apps, the company that developed and operates its two e-commerce channels, said the transaction is expected to close in the second half of 2022.

“We plan to invest up to 160m riyals more over a two-year period to further support the platform and roll-out a network of state-of-the-art dark stores and fulfilment centres,” Mr BinDawood said.

“It’s a strategic acquisition for us, enabling BinDawood Holding to plan and control the future growth of its business in an increasingly digitally-connected world.”

SNB Capital said BinDawood holding's long-term outlook is positive, supported by an increase in the number of pilgrims in Makkah and Madinah after the end of travel restrictions and the company’s store expansion plans.