Mezzan Holding Reports 2015 Financial Results in Line With Targets

The Board has recommended the distribution of 27.5 fils per share (47.4%) for the year, plus 5% bonus shares.

 

  • 7.5% rise in Revenues
  • 31.8% rise in Net Profit

 

Kuwait, February 15th, 2016 — Mezzan Holding KSCC, one of the largest manufacturers and distributors of food, beverage, FMCG and pharmaceutical products in the Gulf, today announced the company’s financial results for Q4 and full year 2015. Full Year Revenue increased to KD196.1 million, representing a 7.5% increase on the same period in 2014 and net profit increased by 31.8% for the year to KD19.4 million.

 

Mezzan Holding CEO, Garry Walsh, said: “We are very pleased with our performance in 2015 where we grew Revenue by 7.5% and our Underlying Net Profit by 16.5%, both of which were in line with the targets we had set ourselves at the beginning of the year. We saw broad based growth across our Food and Non-Food businesses and we continued to invest behind our brands and distribution, running our first ever above-the-line campaigns for the Al Wazzan brand in Kuwait, and for Khazan and Kettle Chips brands in UAE. We are pleased with the distribution gains we made in 2015 across many of the categories we compete in, while our FY Gross Margin expanded by 63pps as we continued to manage the mix of our portfolio.

 

Our performance in 2015 demonstrates the strength of the Mezzan portfolio. We believe our broad base of consumer staple offerings is perfectly placed to benefit from all phases of the business cycle. We will continue to focus on growing distribution on our existing brands, widening our portfolio with new business, investing prudently in our infrastructure and managing cost through productivity. This focus will ensure we deliver quality products to our customers and consumers, while continuing to maximize shareholder value.

 

In closing, 2015 has been a year of significant change for the Group as we transitioned to a listed company, as well as one where we have worked hard to deliver on expectations. I would like to take this opportunity to thank the Board for their wise counsel, and to acknowledge the hard work of the management and staff in who continue to deliver on Mezzan’s potential. It is a genuine pleasure to work with such a dedicated group of people”

 

The company also announced the resignation of Chairman of the Board of Directors, Khaled Jassim Mohammad Al Wazzan, for health reasons. Motasem Jassim Al Wazzan will serve as interim Chairman until the appointment of a new member and a successor by shareholders at the upcoming AGM.

 

Vice Chairman of the Board, Mohammad Jassim Al Wazzan, said: “On behalf of the Board of Directors, I would like to sincerely thank Khaled for his leadership of Mezzan Holding over many years, setting the foundations for current and future success.”

 

Financial Highlights
Q4 2015
KD’m vs. LY KD’m vs. LY
Revenue 45.3 -1.4% 196.1 +7.5%
Reported Net Profit 3.3 +7.0% 19.4 +31.8%
Underlying Net Profit 3.3 +7.0% 17.2 +16.5%

 

Reported Net Profit and Underlying Net Profit reflects Net Profit attributable to Equity Holders of the Parent Company.

2015 Underlying Net Profit adjusted for KD2.2 million relating to insurance proceeds net of impairment reported in Q2.

Full Year Financial Performance Review:

Food Business Line: The Food Business Line accounted for 73.4% of Group Revenue and comprises Manufacturing and Distribution (51.4% of Group Revenue), Catering (13.8%) and Food Services (8.2%). Revenue reached KD143.8 million, an increase of 8.0% compared with the same period in 2014.

  • Manufacturing and Distribution: Full Year Revenue increased 9.0%, with broad based growth across our key operating units. This was largely driven by our company owned brands, rather than our partner brands.
  • Catering: Full Year Revenue declined by 1.8% 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 21.2% 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: The Non-Food Business Line accounted for 26.6% of Group Revenue and comprises FMCG and Pharmaceuticals (23.3% of Group Revenue) and Industrials (3.3%). Revenue reached KD52.2 million, an increase of 6.1% compared with the same period in 2014.

  • FMCG and Pharmaceuticals: Full Year Revenue grew by 6.9% 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 increased by 0.8% with our Plastics business offsetting oil price-driven declines in KLOC, our oil refining business.

Regional Business Highlights:

 In UAE: 2015 was a very successful year for our businesses in the UAE, with Full Year Revenue growth of 10.9%. We launched and expanded distribution on our Kettle Cooked Chips brand, grew distribution on our Khazan meat brand to take market leadership in the Chilled Meat category.

 In Qatar: Full Year Revenue grew by 4.5% with both our Water and Catering businesses performing in line with expectations. We continue to increase utilization on the new water line and combined, Mezzan’s bottled water brands, Dana and Aqua Gulf, have market leadership in the bottled water category in Qatar.

 In Kuwait:

 We successfully re-branded the Al Wazzan food line-up with updated packaging, improved positioning and a more consistent look across the categories.

At the end of Q3, the company started to exclusively distribute Fiji, a natural artesian water, with strong consumer acceptance in the restaurant channel.

The company started to distribute Starbucks Coffee chilled products to cooperative and private supermarkets as part of a distribution agreement with Arla Foods.

A new contract-catering facility was completed, lifting the company’s catering capacity from 10,000 meals a day to 20,000 meals a day.

Kuwait Lube Oil Company (KLOC), a fully-owned subsidiary, inaugurated a new refinery but continues to operate in a challenging environment given the volatility in oil prices.

We have now broken ground on a new consolidated Food warehouse.

In Iraq: The Company launched new retail stores under the auspices of the United Nations World Food Program in Erbil and Dohuk

In KSA: The Company completed the construction of its new warehouse.

(ENDS)

About Mezzan Holding:

      Operates in seven countries through 29 subsidiaries with 7,500 employees

      Distributes over 25,000 Stock Keeping Units (SKU), making it one of the largest operators in terms of SKUs, unit sales, market share and in terms of share of revenues of total consumer spending in consumer categories served by the company

      Active in various segments of the consumer staple industry supported by long-standing relationships with Johnson & Johnson, Olayan Kimberly-Clark, Reckitt Benckiser, General Mills, Arla Foods, Sara Lee and many other leading brands and manufacturers

      Serves over 100,000 meals a day in Kuwait, Qatar and the UAE through its catering business

      Has a total of 130,000 square meters in food, beverage and FMCG manufacturing facilities in Kuwait, Qatar, UAE and Afghanistan

      Leverages long-standing relationships with private and cooperative supermarkets

      Vertically integrated into complementary business operations, including packaging, catering, contract services and logistics

      Food services customers include multinational fast food chains, airline catering services and large food services companies.

Mezzan Holding is a 70-year old company that was listed on Kuwait Stock Exchange in the second quarter of 2015. The company is headquartered in Kuwait with direct operational activities in Kuwait, UAE, Qatar, Saudi Arabia, Iraq, Jordan, and Afghanistan.

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For more information, please contact:

Fatima El-Saadani | Bensirri Public Relations | Tel: +965 999 81334 | email: fatima@bensirri.com