Strong tailwinds accelerate revenue gains

Revenues in 2024 rose 8% to QR 1,145 million from QR 1,057 million last year, thanks to internally driven measures that spurred performance. These included higher sales volumes across our key channels, new product launches, and the impact of annualised price increases in second half of the previous year.

Initiatives such as targeted marketing campaigns made substantial contributions to market share growth in key categories. By the year end, our overall market share was 54.1% compared to 53.5% at the end of 2023, and we held a 62.7% share of the Qatar dairy segment, compared to 61.7% in the corresponding period.

The increase in market share was accompanied by higher sales volumes in the HORECA and retail channels, which grew 8% and 6% respectively. During the year we also launched several new products that cater to our consumers’ evolving needs and tastes. These new SKUs contributed significantly the overall top-line result, with the strongest performers being high protein milk and vitamilk categories.

Operational efficiencies drive net profit growth

The most significant aspect of our 2024 financial performance was the increase in our Net Profit attributable to Baladna shareholders, which rose 69% to QR 185 million from QR110 million in 2023. As a result ,the Net Profit Margin improved significantly to 16.2% in comparison to 10.4% in the last year. Baladna’s business performance delivered excellent value for shareholders in 2024, with earnings per share of QR 0.097, an increase of 69% on the previous year.

While a key contributor was our revenue performance, Net Profits were also boosted by reduction in material prices driven by stable commodity prices, enhanced operational efficiencies across the value chain, following prudent streamlining of most processes and activities. In tandem, we maintained a focus on disciplined cost control measures, which reduced General and Administrative Expenses by 23% for 2024.

During the final quarter of last year, Baladna negotiated better financing rates on its banking facilities, which had an annualised benefit on our bottom line. Additionally, Net Profits received a boost from the fair value gains on our equity investments, which appreciated considerably in 2024. Baladna holds these shares of companies listed on the Qatar and Egypt bourses to secure strategic advantages and create shareholder value.

In EBITDA terms, Baladna reported significant growth of 17% reaching to QR 381 million from QR 325 million in the last year. EBITDA margin reached to 33.3% further strengthening Baladna’s leading position among its regional peers.

Operational resilience amidst global challenges

During 2024, we rolled out a number of operational improvements that had a positive impact on our results. These included reducing process losses in Manufacturing; minimising wastage in Sales and Distribution; and enhancing milk yield in the Farming operations.

In 2024, the region was beset by disruptions to global trade routes, in particular, the Red Sea, which is a vital sea corridor for Gulf countries. Geopolitical affairs had a substantial impact on the flow of goods across ports, adding to congestion, delays and inflation.

Baladna, on the other hand, displayed strength and flexibility to ensure that business carried on as usual without interruption, demonstrating its productivity and value creation. We implemented several strategic measures, including identifying and switching to alternative shipping routes. Additionally, we stockpiled essential inventory to reduce production downtime caused by supply interruptions, and we made a concerted effort to deepen our relationships with key suppliers while forming new supply partnerships.

The outcome of all these measures was minimal impact on the business, as operations continued uninterrupted, transport costs and delays were reduced and our customers remained satisfied with our ability to deliver on time.

Business automation and technological advancements drive operational efficiencies

Technology remains a key driver of Baladna’s operational success, playing a key role in improving efficiencies and optimizing processes across the organization.In the past year, we focused on strategic initiatives that delivered significant cost savings and accelerated decision-making capabilities. The Controlling Profitability Analysis project was a significant achievement, providing a more comprehensive and accurate understanding of profitability.This initiative enhanced visibility into the factors influencing product margins, enabling more informed and effective decision-making across the business.

At the same time, we enhanced our digital infrastructure through key system migrations and integrations. Notably, we upgraded SAP SuccessFactors to optimize human capital management and fully unlocked Microsoft Analytics Platform System (Microsoft APS’s) potential to automate processes across multiple departments. We also improved Power BI dashboards, further strengthening our ability to visualize and analyze data for more informed decision-making. The Integrated Business Planning (IBP) project experienced significant progress, boosting demand forecasting accuracy, inventory management, and production planning within our Supply Chain Department.

New features, such as statistical forecasting, automatic data correction, product lifecycle management, and milk balance, have further optimized our operations, resulting in greater efficiency across the entire value chain. The SAP RISE Migration also marked a transformative milestone, enabling a fully integrated, digital-first environment.

Business expansion strategy

Baladna’s expansion in its domestic market was boosted by the award of a substantial government contract to supply evaporated milk in 2025. The approximate value of this contract is QR 100 million, and the product will be manufactured in our newly constructed state-of-the-art QR 450 million factory. The investment in this facility is an important element of our support for Qatar’s objective of food self-sufficiency.

One of the year’s highlights was the finalisation of a joint venture with the Algerian National Investment Fund to establish the largest vertically integrated dairy farms in the world. We will export our successful business model to this new venture and others currently under consideration, helping our partner countries strengthen their own food security while creating further significant step forward in realising this transformative venture.

Baladna continues to explore potential opportunity to sustainably expand our business, at home and abroad. Domestically, we see opportunities to continue expanding our market share in shareholder value for Baladna’s investors.

Baladna achieved key milestones in the development of this ambitious Algerian project, including signing the framework and shareholder agreements, transferring the initial capital, and incorporating the new entity, “Baladna Algeria.” A number of other crucial agreements, such as the Management Agreement, Definitive Agreement, and Off-Take Agreement, are scheduled for finalisation in the categories where we already operate, while also identifying new and adjacent categories.

Cash flow management and financial position

Our emphasis remained on effective Working Capital management; accordingly, we implemented stringent controls over spending, supported by coming weeks. The company also completed the inaugural Annual General Meeting of Baladna Algeria, culminating in the appointment of its Board of Directors. On the operational front, soil and water analyses have been conducted, with results expected shortly, while a detailed study on the project’s total capital expenditure has been completed. In addition, discussions with key suppliers are progressing as planned to finalise contracts for capital procurement, marking a rigorous investment analysis and business viability assessments. We were gratified by the resulting reduction in Capital Expenditure, which translated into a significant increase in internally generated free cash flow (FCF) to QR 251 million.

Dividend policy aligned to shareholders’ interests

Baladna distributed a cash dividend of QR 132 million in March 2024 arising from the profits earned in 2023. In addition, I am pleased to mention that the Board of Directors has proposed to issue 100 million bonus shares to our valued shareholders as dividend distribution for the year 2024, upon the approval of the upcoming General Assembly Meeting. This move reflects the company’s confidence in its future prospects and aims to reward its valued investors.

We are fully committed to a robust dividend distribution policy that is aligned with shareholders’ expectations and rewards the trust they place in us. Creating and delivering value for our shareholders is, and always will be, a priority. Our strategic vision to expand beyond Qatar will not affect this obligation. As we expand our business horizons, we are equally dedicated to ensuring the interests of our shareholders are upheld, balancing Baladna’s growth aspirations with the delivery of short term and long term gains that are crucial to many of our investors.

Corporate governance and risk management

In 2024, Baladna further enhanced its risk management framework as part of an ongoing exercise to adhere to best-in class governance. Our comprehensive risk register and measures to mitigate all identified risks are now fully embedded in our strategic, operational and financial activities. During the year Baladna updated its written policies and procedures to align with evolving business requirements and industry best practices.

To mitigate the risk of global supply chain disruptions, Baladna maintains a strict inventory of all major materials, to ensure operational continuity. Mindful of the regional warfare situation and supply chain disruptions, such as in the Rea Sea, we took every effort to minimise the risk to our business during 2024. Interest rate risk remained minimal for our business as we benefit from favourable financing rates provided by our banking partners, reflecting the strategic importance of our Company to the country. Most of our foreign transactions are conducted in US Dollars, on which the exchange rate is pegged, therefore, the associated exchange rate risk was negligible.

In an important development in the history of Baladna, a new Board of Directors was appointed following the Company’s first independent nomination procedure. The current Board has a three-year tenure, ending in November 2027. The previous - and inaugural - Board was appointed for five years in terms of Baladna’s Articles of Association in 2019. The new appointments were made in line with legal and corporate governance best practices.

Award-winning corporate reporting practices

In 2024, Baladna’s exceptional commitment to enhance corporate reporting was again lauded by the region’s most prestigious accolade. At the 16th Middle East Investor Relations Association awards, Baladna ranked amongst the Best Digital Annual Report Award 2023 in Small Cap category, reflecting our adoption of best practices in corporate reporting. This is the fourth consecutive year that Baladna has received an award, consolidating its reputation for exceptionally high standards of communication with shareholders.

The outlook for 2025

The normalisation of commodity prices during 2024 is expected to contribute favourably to Baladna’s growth trajectory and operational efficiency. Our strategy remains focused on growing our key product categories, and expanding our share in segments with significant potential, such as cheese and juice. Additionally, we will continue to innovate new products to meet evolving consumer needs. Best-in-class technology and innovation remain crucial to supporting both Operational Excellence and long term sustainable growth.

The 2023 acquisition of the E-life detergent factory, which contributed positively to our results this year, is expected to continue performing in 2025, adding momentum to revenue growth.

Furthermore, our contract with the Government of Qatar to produce and supply evaporated milk in 2025, valued at approximately QR 100 million, will make an important contribution to revenue growth. A major focus for 2025 will be advancing our Algeria project to reach commercial production.

We will continue enhancing operational efficiencies and driving excellence across the value chain. The resulting stronger bottom line and value creation will support our policy to maintain a consistent payout of dividends.

Overall, we are optimistic about the year ahead and confident that our strategy will enable us to deliver strong financial results, drive operational improvements and create long term sustainable value for our shareholders.