Savola Group to capitalize on growth opportunities

Savola Group, one of Saudi Arabia’s leading retail and food holding companies, has issued its fourth quarter and full year 2016 financial results.
Sulaiman A.K. Al-Muhaidib, chairman of Savola Group, said: “2016 was a year of important changes across the group.”
He added: “Importantly, our management team has proactively taken decisive action to address underperformance in our retail division through a carefully thought-through transformation program.”
He said: “In the food segment, while we had to take losses due to the currency devaluation in Egypt and other charges, the underlying fundamentals remain strong.”
The chairman said: “Looking ahead, our focus continues to be improving customer experience in our retail business and enhancing our productivity. As the macro-economic situation slowly improves, we are well-positioned to capitalize on growth opportunities.”
The group reported revenues of SR25 billion in 2016 as compared to SR25.1 billion in 2015.
The lack of growth in revenue was mainly due to the underperformance of the retail segment, exacerbated by the macro environment in Saudi Arabia, a company press release said.
The overall net loss for 2016 was SR451 million, compared to net profit of SR1.792 billion for 2015.
The company reported a number of exceptional one-off items that negatively impacted profitability.
Excluding these charges and the exceptionally high currency losses incurred last year, adjusted net profit for 2016 was SR810 million compared to adjusted net profit of SR1.480 billion in 2015.
Earnings per share were negative at SR0.85 and cash and cash equivalents stood at SR1.3 billion at the end of the year, according to the release.
In the fourth quarter of 2016, Savola reported revenues and a net loss of SR6.2 billion and SR964 million respectively. It recorded revenues of SR6.3 billion and a net profit of SR515 million in the fourth quarter of 2015.
Last year’s revenue was SR13.5 billion, in line with the same period last year. New store openings, coupled with a decline in Like for Like (LfL) sales, contributed to the revenues.
The decline in gross margins is partly due to the costs associated with inventory reduction.
The net loss was SR773 million compared to a profit of SR146 million in 2015. The normalized loss was SR396 million, the release added.
The average retail selling space increased by 1 percent in 2016 as 18 new stores were added across Saudi Arabia.
The strategy for Panda Retail Company over the last several years was to expand aggressively across Saudi Arabia.
The business has built up an extraordinary infrastructure, manifested by its leading store count and unique distribution capability in Saudi Arabia.
A portion of the operating losses in 2016, around SR106 million excluding closure costs, was associated with the convenience format, Pandati.
The format is being reconfigured through store closures and layout changes, the release added.