Mezzan Holding holds 16th Annual General Meeting Shareholders approve cash dividend of 28 fils per share

Kuwait, April 10, 2017 — Mezzan Holding KSCP, one of the largest manufacturers and distributors of food, beverage, FMCG and pharmaceutical products in the Gulf, held its 16th Annual General Meeting (AGM) and an Extraordinary General Meeting (EGM) of Shareholders today.

During the AGM, the shareholders approved the Board of Directors’ recommendation to distribute 28 fils per share for a total dividend payout of KD8,717,100 (28% of capital) for the year.

An EGM was also held to approve several proposed amendments of the statute attached to the articles of association in compliance with the provisions of the Kuwait Company Law 1/2016, the amended laws and their executive regulations, in the interests of the company and its shareholders.

Mezzan Vice Chairman, Mohammad Jassim Mohammad Al Wazzan said: “The Board is pleased with the company’s record revenues and above-peer performance in 2016, despite the challenging macro environment in some of the markets we operate in. Mezzan has performed well in five of the seven markets we operate in, with growth in Kuwait, Qatar, Jordan, and Saudi, where we recently began food manufacturing and distribution activities following our acquisition of 70% stake in Al Safi Foods, which has now been rebranded to Mezzan Foods. We look forward to growing our activities and product portfolio in the Saudi market.

“On behalf of the Board of Directors, I would like to take this opportunity to pay tribute to Mezzan Holding’s former Chairman of the Board, Khalid Jassim Al Wazzan, who passed away in 2016. The late Khalid Al Wazzan led the success of the company starting with his chairmanship of the board to leading the company through the brutal 1990 invasion and reconstruction of Kuwait, and finally to leading the transformation of Mezzan Holding into a publicly listed company. He will be sadly missed by us all and we are grateful for the time he has dedicated to the company and its shareholders over the past 27 years.”

2016 Full Year Financial Performance Review:

  • Revenue: KD207.4 million, an increase of 5.8%
  • Reported Net Profit attributable to Equity holders of the Parent Company: KD17.2 million (flat to last year when excluding a non-recurring gain of KD2.2 million from net insurance proceeds recorded in Q2 2015)

2016 Balance Sheet Highlights:

  • Total Assets: KD 211.7 million, an increase 17.4%
  • Equity to Parent Company: KD106.4 million, up 9.1%

Mezzan Holding performance by business line

Mezzan Holding incorporates 30 subsidiaries and is operationally structured into two primary business lines: the Food Business Line and the Non-Food Business Line. Below is the company’s performance by business line:

Food Business Line: Accounted for 74.9% of Group Revenue, and comprises Manufacturing and Distribution (52.6% of Group Revenue), Catering (12.9%) and Food Services (9.4%). Revenue reached KD155.3 million, an increase of 7.9% compared with the same period in 2015.

  • Manufacturing and Distribution: Full Year Revenue increased 8.4%, with broad based growth across our key operating units. This was largely driven by our company owned brands in Kuwait and regionally, rather than our partner brands.
  • Catering: Full Year Revenue declined by 1.3% due to the completion of long term contracts in Kuwait, which were highlighted in our Q3 Earnings release, and which had a negative impact on performance in the second half of the year. Our catering business in Qatar and UAE performed well and we expect them to make continued progress.
  • Services: Full Year Revenue increased by 20.9% as growth in our tender business in Jordan and Iraq compensated for declines in Afghanistan, which was driven by widely publicized troop withdrawals in Afghanistan. As indicated in previous communications, the nature of the tender business in Jordan and Iraq will result in quarterly fluctuations.

Non-Food Business Line: Accounted for 25.1% of Group Revenue and comprises FMCG and Pharmaceuticals (22.3% of Group Revenue) and Industrials (2.7%). Revenue reached KD52.0 million, a decline of 0.3% compared with the same period in 2015. FMCG business holding well despite softening consumer market and government spending restrictions.

  • FMCG and Pharmaceuticals: Full Year Revenue grew by 1.3% as our key agencies performed well, and despite the loss of one of our pharmaceutical agencies and the harmonization of medicine prices across the GCC, which acted as a drag on Revenue in the second half of the year.
  • Industrials: Industrials revenues declined by 11.8% with our Plastics business offsetting oil price-driven declines in KLOC, our oil refining business.

Regional Business Highlights:

  • In Kuwait: This year’s revenue increased by 4.3%, driven by the growth of the food production and distribution sector and the new franchises. Despite the impact of the losses of the food service sector, the company continued to invest in its technological structure through the implementation of SAP in new companies in the Group, and providing sales representatives with sophisticated devices that enable them to update and follow up the balances and requests of customers from anywhere.
  • In UAE: Full Year Revenue declined by 0.9% in 2016 driven by discretionary portfolio, although there was sequential improvement.

The impact of the economic situation in the United Arab Emirates on the performance of some non-core commodities in our investment portfolio led to a decline in annual revenue by 0.9%, while commodities showed better performance. Beginning from the third quarter of the year, revenues rose for the first time since the beginning of the year as the economic situation in the UAE improved. Revenues in the fourth quarter rose by 8.4% after recording a decline during the first and second quarters of the year.

  • In Qatar: Full Year Revenue grew by 9.8% with continued strong growth in both our Water and Catering businesses.
  • In Jordan: Full year Revenue grew by 42.2% due to successfully tendering for new business with UN/WFP.
  • In KSA: Full Year Revenue grew by 1527.5% due to expanding through the strategic acquisition of 70% of Al Safi Foods Company, which is currently undergoing a turnaround.

The company acquired 70% of Riyadh-based food and beverage products manufacturing and distribution company, Al Safi Food Company with Al Faisaliah Group holding the remaining 30%. Mezzan invested KD7.3 million in acquiring the company,  which is currently undergoing a successful turn-around to improve the activity of Mezzan Foods – Saudi, including the launch of a new variety of products in the Saudi market.

Mezzan Holding started its investment in the Saudi market, the largest consumer market in the GCC in the third quarter of 2016 through an acquisition that enables it to expand  in the manufacturing, marketing and distribution of food products within Saudi, in addition to having exclusive rights to continue manufacturing, marketing and distribution of snack products of Al Safi Food Company in Saudi. This acquisition also enables it to utilize an area of 70,000 sqm in Al Kharj governorate that will be used to develop the company’s future operations.

 

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For more information, please contact:

Fawaz Al-Sirri | +965 66622448 | fawaz@bensirri.com