3.6% rise in revenues for 9 months ended Sept 30

Mezzan Holding CEO Garry Walsh

KUWAIT: Mezzan Holding KSC, 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 Q3 2016. Third quarter revenue was up 3.0 percent as it stood at KD47.7 million, bringing the total revenue for the first three quarters of the year to KD156.2 million, an increase of 3.6 percent over the same period last year.

The Company's overall performance in Q3 comes in line with management expectations given prevailing challenging macro-economic environment in some of the markets in which the company operates. Financial results for the 9-month period ended 30 September 2016 were supported by growth in revenues of Food manufacturing & distribution segment by 7.3 percent on the back of increased production and new business. Profitability was supported by Food manufacturing & distribution and Non Food Fast Moving Consumer Goods Groups which compensated for pressure from the Catering business. The company's profitability for the quarter was also impacted by expected operational losses from newly acquired Al-Safi Foods (now rebranded to Mezzan Foods KSA). The strategic acquisition in the Kingdom of Saudi Arabia was executed in Q3'16 and is currently undergoing a successful turn-around involving various business optimization initiatives and the introduction of new SKUs into the Saudi market.

Underlying net profit for the quarter was KD3.1 million, representing a 3.5 percent increase from the same period last year. As a result of a strong quarter, the company was able to counter the decline in catering revenues that was seen earlier in the year. Mezzan Holding's year-to-date underlying net profit stood at KD13.5 million, representing a subtle decline of -0.7 percent from the same period last year.

Mezzan Holding CEO, Garry Walsh, said: "Our year-to-date performance is inline with our previously announced outlook with the exception of the expected impact on our bottom-line by Mezzan Foods KSA, which is undergoing a turnaround plan and performing above expectations. Our market outlook for the next four quarters is conservative given the predominant market dynamics, however being a consumer company with 80 percent of our portfolio comprises consumer and household staples we are well positioned to continue our healthy performance in this resilient and defensive sector."

Financial Highlights:

Revenue: KD156.2 million, up 3.6 percent

Underlying Net Profit: KD13.5 million, down 0.7 percent*

Reported Net Profit attributable to Equity holders of the Parent Company: KD13.1 million, down 18.7 percent

Q3 2016 Financial Highlights:

Revenue: KD47.7 million, up 3 percent

Underlying Net Profit: KD3.1 million, up 3.5  percent

Reported Net Profit attributable to Equity holders of the Parent Company: KD 3.1 million, down 14.5 percent

YTD (nine-month 2016) Financial Performance Review:

Food Business Line:  The Food Business Line generated KD114.0 million in Revenue, or 73.0 percent of Group Revenue, representing an increase of 4.5 percent compared with the same period in 2015. The Business Line comprises three divisions, and they are Manufacturing and Distribution (52.3 percent of Group Revenue), Catering (12.3 percent), and Food Services (8.5 percent).

Non-Food Business Line: The Non-Food Business Line generated KD42.0 million during the period, or 27.0 percent of Group Revenue, representing an increase of 0.8 percent compared with the same period in 2015. This Business Line comprises two business divisions, and they are FMCG and Pharmaceuticals (24.2 percent of Group Revenue), which grew by 2.4 percent, and Industrials (2.8 percent of Group Revenue), which declined by 11.3 percent  percent in the period.

Regional Business Highlights: Mezzan Holding operates in seven countries, with over 90 percent of revenue generated in Kuwait (66.8 percent), UAE (16.3 percent) and Qatar (9.3 percent). In Kuwait, revenues grew by 3.8 percent, in UAE revenues were slightly down by 3.9 percent, and in Qatar revenues grew by 12.4 percent. The company also saw revenue growth of  28.2 percent in Jordan, contributing  4.6 percent to of the Group's total revenue for the period.