Jarir’s Q2 profit missed estimates: Falcom

Jarir Marketing Co.’s (Jarir) Q2 2019 net profit rose 4 percent year-on-year (YoY) to SAR 169 million, missing the consensus estimate, Falcom Financial Services said in an earnings review.

The net profit growth was slower than the revenue rise as a result of higher promotional expenses, financial charges, and operating costs from the addition of new showrooms, according to Falcom. 

“Revenues increased 11.8 percent YoY to SAR 1,893, largely supported by the good performance of the computer and electronics segments, which was in turn driven by the increased number of showrooms,” it said. 

On YoY basis, profit margins were adversely impacted by the change in the sales mix, which involved higher sales of low- margin products and a decrease in wholesale goods due to the back to school season, Falcom maintained.

Gross profit surged 10.1 percent YoY to SAR 234 million in 2Q19 as the rise in cost of sales for the same period at 12 percent YoY outpaced revenue growth. 

On quarter-to-quarter (QoQ) basis, gross profit declined 22.6 percent as the marginal rise in revenue was offset by the increase in cost of sales, Falcom said in the report, maintaining “Neutral” rating on the stock.