"Extra" to "Argaam": We managed to manage the unprecedented changes in 2020 and achieved the highest sales and net profit in our history.. and our market share is 21.8%
Abdullah Al-Fozan, Chairman of the United Electronics Company (eXtra), expressed his happiness with the company’s results, saying: “The year 2020 was not an exceptional year for “eXtra” only, but also for the whole world, as the latter was affected by a once-in-a-lifetime pandemic that cast a shadow over the global economy, to bring about an intense economic slowdown that we are witnessing for the first time in the modern era, which of course impacted the Kingdom's economy. But praise be to Allah, and thanks to the efforts made by the government of the Custodian of the Two Holy Mosques, may Allah protect him, it managed to control the spread of this pandemic and limit its negative effects in all social and economic forms, as well as overcome all means to deal with the crisis in order to restore the economic growth. On behalf of eXtra Board of Directors, I would like to reiterate the company's full and sincere support for the steps taken by our wise government to support the economy of our beloved Kingdom, thanks to the pillars of the Saudi Vision 2030 under the leadership of His Royal Highness the Crown Prince, may Allah protect him, which will preserve this nation’s achievements as well as the safety and health of its people.
The Chairman of “eXtra” explained that since the middle of the first quarter of the year, the company has professionally succeeded in managing these changes, starting with dealing with supply chain disruptions due to the spread of the pandemic in China, then closing commercial centers and imposing a curfew in the Kingdom for up to five weeks during the second quarter. The demand shifted towards e-commerce sales during lockdowns, as well as the application of the highest precautionary requirements and social distancing measures after the opening of exhibitions. It also worked to preserve the safety of our customers and employees alike, and succeeded in managing the Annual Sales Festival this year despite these circumstances, as we were the first retail company in the Kingdom to implement a system for booking appointments before visiting exhibitions to ensure the application of the highest standards to maintain the safety of our customers.
Mohamed Galal, Managing Director and CEO of “eXtra”, said that praise be to Allah, the company has successfully managed these unprecedented changes during the year 2020 and keeps going thanks to our operational excellence in accomplishing the company’s highest sales milestone of approximately SAR 6 billion, as well as achieving the highest net profit also estimated at SAR 280 million.
We have undoubtedly learned many lessons from these unfavorable conditions, which will enable us to develop our business in the future in order to work on providing the highest levels of customer experience in the retail sector to always live up to our customers’ aspirations, thanks to whom “eXtra” has achieved these successes, added Galal.
The Managing Director stated that many changes have affected the size of the electronics and home appliances market in Saudi Arabia during the year 2020, such as an increase in screens and large home appliances sales during lockdown periods and curfews, as well as an increase in demand for products before the implementation of the value-added tax (VAT), in addition to the transformation of remote learning. All this led to a market growth of nearly 2% over the previous year. As for eXtra's market share, the stock scored at the end of November an estimated 21.8% compared to 19.4% for the same period in 2019, which is the company’s highest market share in its history, according to the latest reports issued.
All this contributed to achieving a sales growth of 16.1% from the previous year, and eXtra sales reached SAR 5.9 billion compared to SAR 5.1 billion for the year 2019. The total profit grew by 15.9% from the year 2019 to record SAR 1,044 million compared to SAR 901 million for the past year. This is in addition to our success in raising the spending efficiency, as sales and general expenses accounted for 11.7% of sales for the year 2020, compared to 12.7% for the year 2019 despite the high operating expenses of “Tas’heel” company, which started operating in mid-2019.
It is noteworthy that the year 2020 added further success, as the e-commerce sector sales exceeded the one billion Saudi Riyals barrier for the first time in the company's history, in addition to achieving for the first time as well the company's quarterly profits amounting to more than one hundred million Saudi Riyals during the fourth quarter, achieving a growth of 41.2% compared to the fourth quarter of the previous year. Thus, eXtra’s profits reached an estimated SAR 280 million for the year 2020, compared to SAR 205 million, scoring a growth rate of 36.3%. Also during the year, Tas’heel turned profitable only one year after it started its operations despite the unfavorable circumstances that we faced, to record profits estimated at SAR 21 million during 2020 in comparison to losses amounting to SAR 18.9 million from last year.
When asked about the future expectations, the Managing Director replied: The electronics and home appliances market is eligible for growth in the medium term, as the Kingdom’s demographic structure imposes that, explaining that 50% of Saudis are under age 25, which will boost the demand for electronics in the future. In addition to that, the State’s efforts to increase the homeownership rate for citizens through real estate financing programs, which in turn will lead to a significant increase in the demand for home appliances, setting “eXtra” apart as the largest shopping destination in this sector. Regarding consumer finance services, Galal explained that the share of the non-banking sector in financing services is still small if compared to the volume of financing in the Kingdom. Being one of the first Sharia-compliant companies in the sector to use technology to provide medium and micro consumer finance services, I expect that it will facilitate leadership in this promising sector, noting that after one year of operation the company turned profitable.
Galal ended his speech by saying: eXtra’s performance during the year 2020 reflected what the company’s management adopted in developing a clear strategy based on integrating technology and innovation in its operational sector and building a system that keeps pace with market developments. The company also works to integrate the stereotyped sectors with the latest technology in the retail and consumer finance sectors, and this is reflected in all the services we provide, whether by developing an e-commerce platform and working continuously to develop the concept of multichannel retailing in a way that amounts to providing the best integrated shopping experience in the retail world or through Tas’heel’s electronic platform, which is the first of its kind not only in the Kingdom, but also in the region, to quickly provide the latest digital types of Sharia-compliant consumer finance.