Aamal posts QR492mn profit in 2011; revenues soar 57%

Aamal Company has reported about 7% decline in its 2011 net profit to QR492.15mn although operating profit was on a positive trajectory.

The net profitability was impacted by a 13% decline in net fair value gains on investment properties, according to the company’s financial statement filed with the Qatar Exchange.

The group’s net margins (before fair value gains on investment properties) shrank to 12.9% in 2011 from 19.1% a year ago primarily due to a change in the business mix with a greater focus on higher volume, lower margin industrial manufacturing segment in line with the company’s medium-term growth strategy, according to Aamal Company chairman Sheikh Faisal bin Qassim al-Thani.

Total revenues however soared 57% to QR1.91bn. It was “driven principally by an increase in revenues of over 100% in the industrial manufacturing division,” he said.

Industrial manufacturing revenues now make up the majority of the group’s total revenues, at 59% against 45% a year ago, in line with its strategy to focus the business on meeting increasing demand driven by Qatar’s huge infrastructure investment programme, Sheikh Faisal said.

Although, the unit reported a 26% rise in net profit to QR62.1mn, the margins had fallen to 5.5% in 2011 from 8.9% in the previous year mainly due to “pressure” on margins at Aamal Readymix and Aamal Cement industries.

The readymix concrete market in Qatar continues to be highly fragmented with selling prices remaining under pressure due to the current level of oversupply and a highly competitive environment, according to him.

“Aamal’s industrial manufacturing division is targeting infrastructure projects in Qatar as well as in the broader Gulf region,” Sheikh Faisal said.

The company witnessed revenue growth across its other three sectors – trading and distribution, property and managed services, he added.

The trading and distribution segments witnessed 22.1% and 33.3% growth in revenue and net profit to QR523.60mn and 63.30mn, respectively, Sheikh Faisal said, adding that net profit margins improved to 12.1% in 2011 from 11.1% in the previous year due to increase in revenues (through Aamal Trading and Distribution, Aamal Medical and Ebn Sina Medical) from new contracts.

Its property division saw 6.7% and 3.2% rise in revenue and net profit to QR213.7mn and QR161mn with growth primarily coming from Aamal Real Estate although City Centre still accounted for the lion’s share (74%) of the division’s total revenue.

However, net profit margins (before fair value gain on investment properties) across the whole division fell slightly to 75.3% in 2011 from 77.9% in 2010 mainly due to an increase in repair and maintenance and house-keeping expenses, Sheikh Faisal said.

The occupancy at the City Centre dropped slightly to an average 90% in 2011 as 10% was “strategically held back” to allow for the active management of the shopping mall and for better space allocation following a planned second phase expansion.

Aamal’s managed services division recorded 25.8% in revenue to QR57.5mn, primarily attributable to the first year of operations by its joint venture Johnsons Control.

However, net profit fell 23.8% to QR7.7mn in 2011 and net profit margins sunk to 13.4% in 2011 from 22.1% a year ago due to increase in direct costs at Aamal Services and the cost of opening of the new ECCO Gulf call centre.