Shaker’s supply agreement with LG effective from Q1; all segments report growth: CEO

Mohammed Abunayyan, CEO of Al Hassan Ghazi Ibrahim Shaker Co.

Al Hassan Ghazi Ibrahim Shaker Co.’s (Shaker) comprehensive supply agreement with LG entered into force during the first quarter of 2023, Mohammed Abunayyan told Argaam in an interview.

He added that the company's products witnessed strong demand for the current period.

Abunayyan explained that the heating, ventilation and air conditioning solutions (HVAC) and the home appliances segments increased by 22.1% and 11.4% year-on-year (YoY), respectively, for Q1 2023. Meanwhile, all remaining segments, such as the consumer retail, projects B2B and after-sales services, saw increases. 

Shaker’s acquisition of 10% of Cashew KSA will improve the online shopping experience through Cashew’s buy-now-pay-later solutions, leading to increased sales and customer loyalty.

Below are the details of the interview:

Q: Shaker's profits grew by 95% YoY and 1,467% QoQ in Q1 2023. How do you view these results?

A: The profit growth we achieved during Q1 2023, compared to Q1 2022 and Q4 2022, is a testament to the dedication and diligence of our team.

These are the result of the strategic plans that have been implemented and the operational efficiency that we have worked hard to maintain and enhance. During the quarter, we were able to reap the benefits of our focus on key growth drivers, such as diversifying our product portfolio and holding strategic partnerships, such as our partnership with LG, which significantly expanded our footprint in the market.

Our continued investment in innovation and improving the efficiency of our operations has also had a significant impact on delivering strong results.

This positive performance underscores the effectiveness of our strategy and our ability to adapt and respond to rapid market dynamics. It's an outstanding start to 2023 and we look forward to continuing this momentum.

Q: What was the volume of demand for Shaker’s main products during Q1 2023 compared to Q4 2022?

A: We have already seen strong demand for our products during Q1 2023 driven by the diversification of our product portfolio and business expansion.

The supply agreement with LG, which now includes its full range of home appliance products, came into effect during the first quarter of 2023, while the HVAC solutions segment achieved revenue growth of more than 22% YoY, and we expanded our business in the projects segment.

Compared to the fourth quarter of fiscal 2022, Shaker have seen a significant rise in demand. It should be noted here that our operations run seasonally, so a direct comparison of these two quartiles may not provide the most accurate representation of the growth. We are optimistic about the strong demand for our product offerings and are focused on continuing to drive this momentum.

Q: Which products contributed the most to the profit and revenue in Q1 2023?

A: Although we do not disclose specific details on the product level and their profit margin, we saw growth across all our business segments in Q1 2023, including consumer, projects and aftersales segments.

Looking at the overall revenue distribution, we see it is almost evenly divided among the HVAC solutions and home appliances segments, at 51% and 49%, respectively.

These segments also saw significant revenue growth, rising by 22.1% and 11.4%, respectively, balanced by the sustainability of gross margins as a result of our proactive ability to manage our product portfolio across all channels, including e-commerce, retail, distribution and projects platforms.

Q: Are there any changes in the prices of your products compared to the previous year?

A: We continue to review our pricing strategy to ensure it is in line with market trends, competition, commodity costs and our overall business strategy. Although there may be price adjustments, we primarily focused on delivering exceptional value and high-quality products to our customers at competitive prices across all business channels.

Q: How much did you earn from exports in Q1 2023?

A: We currently export from our joint factory with LG to more than 20 countries in the Middle East and Africa, which is evidence of the factory's ability to meet the needs of diverse markets in line with Saudi Vision 2030, which, particularly, supports local companies and factories to export their products abroad.

I would like to point out here that we do not disclose specific export figures. In terms of distribution and the consumer segment, our primary focus at this stage remains on expanding and consolidating our leading position in our home market Saudi Arabia.

As part of this strategy, we have sold our entire stake in Emirates Energy Management Services Company (EMS) and listed our stake in Modern Vision Electronics & Electrical Appliances, a company based outside the Kingdom. In parallel, we are committed to serving our local customers and contributing to the economic development of the Kingdom.

Q: What about Shaker’s share in the Saudi home appliances and entertainment market?

A: Our share in the home appliances and entertainment market increased significantly, driven by our product offering and a strong portfolio of leading global brands.

Though we cannot reveal the exact market share, we affirm that we are proceeding with garnering a leading market share in this sector.

We not only focus on expanding our market share, but also on pushing sustainable growth and commitment to quality services and innovation.

Our continued investments in product portfolio diversification, the growth of the projects segment and strategic alliances, as well as digital transformation indicate our unwavering commitment to this high-growth market. As we continue to grow, we are certainly open to exploring opportunities in foreign markets if they align with our strategic objectives.

Q: What is the financial impact expected from Shaker’s acquisition of a 10% stake in Cashew KSA?

A: Our acquisition of a 10% stake in Cashew KSA is an important part of our growth strategy through the diversification of non-core segments, which complement our portfolio.

The wide-ranging potential aspects of cooperation aim to diversify our business portfolio and enhance access to end consumers through different sectors and channels.

This cooperation will largely enhance the existing retailing. Further, integrating the buy-now-pay-later (BNPL) solutions from Cashew when logging out at our retail stores will create attractive and flexible purchasing options for consumers, as well as boost sales and customer loyalty.

Similarly, Cashew’s BNPL solutions on our platforms will improve the online shopping experience, facilitate purchasing and maintain the customer base.

This strategy will enhance our capabilities in the fast-growing digital lending across the Kingdom.

Amid the financial technology and digitalization innovations and their impact on demand, our alliance with Cashew enhances our position to leverage this transformation, which will, in turn, contribute to Shaker’s long-term growth and diversification strategy.

Q: When will Shaker start exporting products to new overseas markets? Which markets are you targeting?

A: While we focus on our core Saudi market, we take pride in our joint venture with LG, which serves markets outside the Kingdom and exports products to more than 20 countries across the MENA region.

This underlines our world-class manufacturing capabilities and the prime quality of our products. Meanwhile, we continue to assess potential strategic opportunities that align with our long-term growth goals and enhance our business portfolio. Our commitment to Vision 2030 and the role we play in the Kingdom’s economic development and local manufacturing comes on top of our growth strategy.