Saudi-based grocery retail operator BinDawood Holding Co. has reported its first quarter 2021 financial results, which stood at SAR 1.12bn compared sequentially to SAR 1.11bn in Q4 2020.
Despite some green shots of recovery, the company presumes that it would return to pre-covid sales only in the second half of 2021.
First quarter revenue 2021 increased 1% sequentially against fourth quarter 2020, however, compared year-on-year to Q1 2020, the company witnessed a decrease in revenue from SAR 1,413.2 million to SAR 1,124.4 million.
“The marginal gain was driven by higher sales across BinDawood stores. Our net profit this quarter is SAR 62.1m compared sequentially to SAR 57.4m in Q4 2020, an 8.2% improvement. Our performance is significantly down year-on-year but when making this comparison it is important to bear in mind the one-off gain in sales from pantry-buying in March 2020, as a result of the national lockdown, which helped bolster those numbers,” said Ahmad AR. BinDawood, CEO of BinDawood Holding.
The sequential growth in quarterly sales was driven by BinDawood stores, which contributed SAR 317.3m in Q1 2021 versus SAR 300.6 million in Q4 2020. This 5.6% jump in sales was principally from the Company’s five stores located in the Makkah and Madinah (“Haramain”) area, which witnessed the return of a select number of local pilgrims performing Umrah in the first quarter 2021. BinDawood store sales helped to offset a SAR 5.4 million or 0.7% decline in Danube revenues. The Danube stores posted sales of SAR 807.1 million in Q1 2021 versus SAR 812.6 million in Q4 2020.
Both BinDawood and Danube stores saw an overall SAR 288.8 million or 20.4% fall in Q1 2021 sales from the corresponding period in the previous year. BinDawood sales dropped by SAR 144.6 million or 31.3% and Danube was down SAR 144.2 million or 15.2%. The SAR 288.8 million decline in revenue is attributable mainly to non-recurring pantry buying in the month of March 2021 and a SAR 55.7 million a drop in sales from the Haramain area, which closed its stores on 17 March 2020 due to the pandemic.
Gross profit for Q1 2021 was SAR 373.4 million, or 33.2% of sales. Gross profit for Q4 2020 was SAR 359.1 million, or 32.3% of sales. This sequential increase in gross profit and gross profit margin was driven by BinDawood’s Haramain store sales posting improved sales and gross margin. However, Q1 2021 gross profit remains lower as compared to Q1 2020 gross profit of SAR 452.4 million, or 32.0% of sales, due to drop in sales as explained above even though gross margin improved by 120 basis points due to reduction in shrinkage and wastage.
Operating expenses in Q1 2021 were SAR 288.6 million versus SAR 303.8 in Q1 2020. This decrease is due to curtailment of Covid-19 related expenses in the current quarter as compared to the same period last year. On a sequential basis also, operating expenses were SAR 8.2 million lower, reflecting management’s cost containment measures.
The company’s financial position continued to be strong with no bank debt. Cash generated from
operations in Q1 2021 was SAR 272.3 million versus SAR 31.4 million in Q4 2020. This significant increase was due to normalization of working capital level during current quarter compared to higher level of working capital investment in Q4 2020. The cash generated from operations was higher at SAR 419.9 million in Q1 2020, reflecting higher profitability and lower investment in working capital. As of 31 March 2021, the Company had a cash balance of SAR 396.6 million, which represented an increase of 70.8% as compared to 31 December 2020.
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