Unveiling Qatari Investors 2023 Challenges – Riding the Waves of Sales Decline with a Non-core Business Income Lifesaver

• The company's sales revenue declined by 31% year over year.

• The Investors shares experienced a decline of 3% during 2023.

• Net profit witnessed a decrease in 2023 due to a remarkable drop in sales revenue and a drop in fair value changes. These adverse effects were almost offset by non-core business income.

Throughout the year 2023, The Investors’ (Qatari Investors Group) stock price experienced a decline. The year began with stock trading at 1.69 riyals per share, and by the end of the year, it closed at 1.64 riyals per share, representing a 3% decrease.

Here are the key numbers:

● Sales Revenue: 515 million QAR vs. 744 million QAR in 2022 (a 31% YoY decline).

● Gross Profit: 281 million QAR vs. 368 million QAR in 2022 (a 24% YoY decline).

● Net Profit: 187 million QAR vs. 190 million QAR in 2022 (a 2% YoY decline).

● Earnings per Share: 0.150 QAR/share, the same as in 2022 (no YOY change).

● Dividend per Share: 0.150 QAR/share, the same as in 2022 (no YOY change).

Dominated by industrial and contracting activities, the company's primary revenue streams faced substantial challenges in the last two years. External factors, including the repercussions of the Ukraine war, disruptions in the supply chain, and the looming threat of a recession due to stringent policies enforced by major global central banks, exerted a significant influence on this sector of the business. As a result, the company witnessed a noteworthy decline in sales, leading to a substantial adverse impact on the net profit, amounting to 113 million QAR.

In order to grasp the full scope of the decline in sales, it is imperative for the management to undertake a comprehensive analysis covering all product lines. This examination will enable them to discern the degree to which external factors have played a role in the downturn, as well as identify internal business factors such as alterations in competitive positioning and potential customer attrition. Equipped with this understanding, the management can strategically address elements under their control. By implementing targeted initiatives to boost sales and improve profitability, the company can fortify its market standing and alleviate the impact of external challenges.

A detailed examination of the fiscal performance between 2022 and 2023 underscores a significant enhancement in the average gross profit margin. During 2022, the company sustained a 49% gross profit margin, exhibiting a noteworthy positive shift in 2023, reaching 54%. This upturn in the gross profit margin played a crucial role in positively influencing the net profit, contributing an amount of 26 million QAR. However, it is important to note that this improvement only partially mitigated the substantial adverse effects of the sales decline during the same period.

Annually, the Group's investment properties undergo a fair value assessment conducted by a certified external property valuer in the State of Qatar. As of the conclusion of 2022, a significant positive fair value change was observed. However, by the end of 2023, a slight negative adjustment occurred, impacting the net profit adversely with a recorded amount of 75 million QAR. This variance in fair value adjustments highlights a dynamic element in the financial landscape and underscores the importance of staying attuned to market fluctuations in property values.

In conjunction with the aforementioned fair value adjustment, the management conducted an internal review of goodwill impairment. Notably, by the close of 2022, a considerably higher negative adjustment was identified compared to the year-end 2023 assessment. This evaluation exerted a positive influence on the overall profit, contributing an amount of 114 million QAR.

In addition to the revenue generated by its core business activities, the company has harnessed significant income from various supplementary sources beyond its primary operations. Notably, a substantial portion of this additional income is derived from interest revenues. The impact of this supplementary income source represented a positive influence of 15 million QAR when compared to the year 2022. This notable increase underscores the company's successful approach to deploying surplus funds.

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