KUWAIT: Mezzan Holding KSC, one of the largest manufacturers and distributors of food, beverage, FMCG and pharmaceutical products in the Gulf yesterday announced the company’s financial results for Q1 2016. Quarterly revenue increased to KD55.7 million, representing a 5.3% increase on the same period in 2015 and the highest quarterly revenue in the company’s history. Net profit was 4.8% lower at KD5.2 million for the three months ended March 31, 2016.
Mezzan Holding CEO, Garry Walsh, said: “Performance for Q1 was in line with our expectations with Revenue growth of 5.3%, driven by broad based growth across our Food and Non Food businesses. Net profit declined to KD5.2 million, down 4.8%, driven by the anticipated impact of declines in our Catering business and additional taxes not present in Q1 2015, prior to the listing of Mezzan Holding shares on the Kuwait Stock Exchange.
We were pleased with our overall performance given some of the macro-economic challenges across the markets we operate in. Our consumer staple portfolio, which generates more than 70% of our revenue, demonstrated its resilience in these challenging market conditions, while new business, distribution gains and market share gains in some of our key businesses added to the growth momentum.
Our Full Year outlook continues to be High Single Digit/Low Double Digit Revenue growth with some leverage on the Net Profit line, which is in line with the targets we set ourselves at the beginning of the year. As previously communicated, we expect to see a stronger second half to the year, as new business comes on stream and we begin to lap the Catering declines in the second half of 2015. We will continue to invest prudently in our brands and infrastructure to ensure we deliver quality products to our customers and consumers, while continuing to spend wisely, seeking maximum shareholder value.”
Food Business Line: The Food Business Line accounted for 66.9% of Group Revenue and comprises Manufacturing and Distribution (47.8% of Group Revenue), Catering (11.2%) and Services (7.9%). Revenue reached KD37.2 million, an increase of 2.7% compared with the same period in 2015.
Manufacturing and Distribution: Q1 Revenue increased 5.5%, with broad based growth across our key operating units. This was largely driven by our company owned brands, rather than our partner brands.
Catering: Q1 Revenue declined by 15.6% due to the completion of long term contracts in Kuwait, which were highlighted in previous earnings releases. Our catering business in Qatar and UAE performed well and we expect them to make continued progress.
Services: Q1 Revenue increased by 19.6% driven by growth in our tender business in Jordan, offset by declines in our Afghanistan business due to troop withdrawals. As indicated in previous communications, the nature of the tender business in Jordan will result in quarterly fluctuations.
Non-Food Business Line: The Non-Food Business Line accounted for 33.1% of Group Revenue and comprises FMCG and Pharmaceuticals (30.3% of Group Revenue) and Industrials (2.8%). Revenue reached KD18.4 million, an increase of 11.0% compared with the same period in 2015.
FMCG and Pharmaceuticals: Q1 Revenue grew by 12.5% as all our key agencies performed well.
Industrials: Industrials revenues declined by 2.7% driven by oil price-driven declines in KLOC, our oil refining business.
KUWAIT: Q1 Revenue grew by 5.8%, despite the impact of losses in the Catering business. FMCG and Food Manufacturing and Distribution helped drive double digit growth, excluding Catering.
