The Investors 2024: Declining Sales and Shrinking Margins Keep Pressuring Profits

• The company's sales revenue declined by 3% year over year.

• The Investors shares experienced a decline of 6% during 2024.

• Net profit witnessed a decrease in 2024 due to a remarkable drop in sales revenue and gross profit margin decline as well as lower performance of associates.

Throughout the year 2024, The Investors’ stock price experienced a decline. The year began with stock trading at 1.64 riyals per share, and by the end of the year, it closed at 1.54 riyals per share, representing a 6% decrease.

Here are the key numbers:

● Sales Revenue: 501 million QAR vs. 515 million QAR in 2023 (a 3% YoY decline).

● Gross Profit: 248 million QAR vs. 281 million QAR in 2023 (a 12% YoY decline).

● Net Profit: 165 million QAR vs. 186 million QAR in 2023 (a 12% YoY decline).

● Earnings per Share: 0.133 QAR/share vs 0.150 QAR/share, the same as in 2023 (an 11% YoY decline).

● Dividend per Share: 0.130 QAR/share vs 0.150 QAR/share, the same as in 2023 (a 13% YoY decline).

Dominated by industrial and contracting activities, the company's primary revenue streams have faced substantial challenges over the past two years. External factors, including the repercussions of the Ukraine war, supply chain disruptions, and the looming threat of a recession due to stringent policies enforced by major global central banks, have significantly impacted this sector of the business. As a result, the company experienced a notable decline in sales, leading to a substantial adverse impact on net profit, amounting to 8 million QAR. This downward sales trend has continued from 2023, albeit at a lower percentage.

Given this ongoing trend over the past two years, it is imperative for management to conduct a comprehensive analysis across all product lines. This examination will help determine the extent to which external factors have contributed to the downturn, as well as identify internal business factors such as changes in competitive positioning and potential customer attrition. With these insights, management can strategically address the elements within their control. By implementing targeted initiatives to boost sales and improve profitability, the company can strengthen its market position and mitigate the impact of external challenges.

A detailed examination of fiscal performance between 2023 and 2024 highlights a significant decline in the average gross profit margin. In 2023, the company maintained a 54% gross profit margin, which saw a notable downturn in 2024, dropping to 50%. This decline in the gross profit margin played a crucial role in negatively impacting net profit, contributing to a loss of 25 million QAR. As this impact, combined with a drop in sales, has significantly weakened net profit, management must prioritize addressing these two issues as top agenda items.

To support business growth, the company strategically invested in several associate companies. However, their performance in 2024 fell short compared to 2023, leading to a negative impact on net profit. This decline in associate earnings contributed to a net profit reduction of 17 million QAR, further exacerbating the company’s overall financial challenges.

The company has successfully reduced general and administrative expenses, leading to a 17 million QAR positive impact on net profit. This cost-saving measure is particularly valuable given the ongoing challenges posed by declining sales and a shrinking gross profit margin. However, while this improvement is a step in the right direction, it is not substantial enough to fully counterbalance the broader negative financial trends.

For more comprehensive information, please refer to the reliable financial information source, http://sahmik.com.