Baazeem Trading Co. is planning to grow its sales in the GCC, as well as other promising Arab and African markets, the company’s chairman, Salem Baazeem, told Argaam ahead of the company’s planned initial public offering (IPO) on the parallel market.
Baazeem added that his company will maintain its dividend policy, backed by its strong performance over the past few years.
Q: Can you give us an insight into the company’s history?
A: My father established the company in 1956 as a sole proprietorship. As my father passed away, the heirs formed a limited partnership in 1978, then converted Baazeem into a closed joint stock company in 2007.
The company operates in retail and wholesale trade of household and food products. It is also the sole distributor of several, prominent international brands, which have grabbed a large market share in Saudi Arabia. Baazeem also distributes its own leading brands inside and outside the kingdom.
Q: What is the reason behind offering the company’s shares in the Parallel Market?
A: One of the key reasons behind going public is maintaining the company’s success.
Q: In the last few months of 2016, the retail sector has been impacted by lower consumer spending. Do you think that trend will affect the company’s future performance?
A: Consumers will reprioritize their needs, however, they will not stop buying their everyday, family needs, such as sponges or canned foods.
Therefore, the company should focus on its operations to avoid any weaknesses, and grow its market share instead of just maintaining it.
Q: What about the company’s future expansions?
A: We operate in many markets worldwide. We will continue expanding our signature brand products and boost our sales in the GCC countries, as well as the rest of Arab and African markets.
The more distribution markets we have, the better known we become. Expansion is one of the five key objectives of Baazeem; therefore, we should first promote our products in the promising Arab market, and then shift to Africa.
Q: Is Baazeem planning to tap the land plot leased from Asfan Municipality by building a warehouse and a plant in the coming period?
A: The company aims to operate through its own warehouses and gather all plants in a single location, so that costs can be minimized.
Q: Can you give us an idea about your various brands and future plans?
A: The company owns several brands that dominate a large market share, such as Maog, which was first registered in 2000 under the “21” class of goods. Maog is currently registered in various classes not only in the kingdom, but in all neighboring GCC countries, as well as East Asia and Europe to ensure its protection.
Q: Baazeem saw its net and gross profit margins higher at 42.6 percent and 10.7 percent in 2015, respectively. How did the company control its costs?
A: Baazeem is always looking for new suppliers for distributed products. However, comparison between suppliers helped Baazeem reduce product costs.
Meanwhile, the company records higher profit margins from its own product lines. Accordingly, profit margins would expand driven by higher sales of Baazeem’s brand products.
Q: Financial statements indicated that the modern trade channel accounts for 43 percent of total revenue. Is Baazeem planning to expand its distribution channels?
A: Expansions are on track. The modern trade channel dominates that large percentage, thanks to its market size, as it focuses on supermarkets and hypermarkets. Baazeem is seeking contemporary, modern trade channels such as e-trading in light of the advanced technology deployed across the kingdom.
Q: The company distributed SAR 12.07 million dividends, or 33 percent of its 2015 net profit, will Baazeem maintain that policy after listing?
A: Baazeem is always working to aggrandize its profit and value, as proven by its strong track record over the past years. Therefore, the company will maintain its dividend policy.
Q: What are your expectations for Baazeem’s IPO?
A: I expect a strong uptake of the company’s shares, as qualified investors have recently shown strong interest in the company.
Comments
{{DisplayName}}
{{ElapsedTime}}