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Saudi Telecom Company (stc) announces its interim condensed consolidated financial results for the period ending on 30-06-2020 (six Months)

STC 7010 -3.99% 39.75 -1.65
Element List Current Quarter Similar quarter for previous year %Change Previous Quarter % Change
Sales/Revenue 14,920 13,604 9.673 13,935 7.068
Gross Profit (Loss) 8,341 8,207 1.632 8,196 1.769
Operational Profit (Loss) 3,062 3,477 -11.935 3,004 1.93
Net Profit (Loss) after Zakat and Tax 2,724 2,848 -4.353 2,913 -6.488
Total Comprehensive Income 2,054 2,164 -5.083 3,099 -33.72
All figures are in (Millions) Saudi Arabia, Riyals
Element List Current Period Similar period for previous year %Change
Sales/Revenue 28,855 26,989 6.913
Gross Profit (Loss) 16,537 16,111 2.644
Operational Profit (Loss) 6,066 6,753 -10.173
Net Profit (Loss) after Zakat and Tax 5,637 5,598 0.696
Total Comprehensive Income 5,152 5,014 2.752
Total Share Holders Equity (after Deducting Minority Equity) 62,923 62,528 0.631
Profit (Loss) per Share 2.82 2.8
All figures are in (Millions) Saudi Arabia, Riyals
Element List Explanation
Increase (Decrease) in Net Profit for Current Quarter Compared to the Same Quarter of the Previous Year is Attributed to The decline of SR 124m in net profit for the 2nd quarter of 2020 compared to the comparable quarter last year is attributed mainly to the following:

1) The increase in gross profit by 1.63% (SR134m), as a result of the increase in revenues by 9.7% (SR 1,317m), while cost of revenues increased also by 21.9% (SR 1,183m)

2) The increase in operating expenses by 11.60% (SR 549m) were due to an increase in general and administration expenses in an amount of SR 254m, an increase in selling and marketing expenses in amount of SR 193m, and an increase in depreciation and amortization in an amount of SR 101m.

Increase (Decrease) in Net Profit for Current Quarter Compared to the Previous Quarter is Attributed to The decline of SR 189m in net profit for the 2nd quarter of 2020 compared to the last quarter is attributed mainly to the following:

1) The increase in gross profit by 1.77% (SR145m), as a result of the increase in revenues by 7.1% (SR 985m), while cost of revenues also increased by %14.6 (SR840m).

2) The increase in operating expenses by %1.68 (SR 87m), were due to an increase in selling and marketing expenses by SR 188m which was offset by a decrease in general and administration expenses in an amount of SR 55m and a decrease in depreciation and amortization in an amount of SR 47m.

3) Net other gains of SR 131m were booked in current quarter, compared to net other gains of SR 431m, mainly due to the gains booked in last quarter with respect to selling the company’s direct share in Careem after completing Uber’s acquisition.

Increase (Decrease) in Net Profit for Current Period Compared to the Similar Period of the Previous Year is Attributed to The increase in net profit for 6 months period by SR 39m compared to the comparable period last year, was mainly due to the following:

1) The increase in gross profit by 2.6% (SR426m), as a result of the increase in revenues by %6.9 (SR 1,866m), while cost of revenues also increased by %13.2 (SR 1,440m).

2) Operating expenses increased by %11.9 (SR 1,112m), were mainly due to an increase in selling and marketing expenses in an amount of SR 482m (mainly due to the increase in doubtful debt provision in the current period), an increase in general and administration expenses in an amount of SR 313m and an increase in depreciation and amortization in an amount of SR 317m.

3) Net other gains in an amount of SR 562m were booked in the current period, compared to net other losses of SR (93m), mainly due to the gains booked in current period with respect to selling the company’s direct share in Careem after completing Uber’s acquisition.

Basis of the External Auditor's Opinion Unmodified opinion
Reclassification of Comparison Items Certain comparative figures have been reclassified to conform with the classification used for the period ended 30 June 2020.
Additional Information Earnings before interest, taxes, zakat, depreciation and amortization (EBITDA) for the 6 months period amounted to SR 10,671m compared to SR 11,041m for the corresponding period last year, with a decrease of (3.35%), and for the second quarter was SR 5,342m, compared to SR 5,655m for the same quarter last year, with a decrease of (5.55%).

Commenting on these results, Eng. Nasser bin Sulaiman Al-Nasser, stc Group CEO, indicated: the company, despite the emerging epidemic conditions of the Corona Virus (COVID-19), was able to grow its top line by 9.7% in the current quarter compared to the same quarter of the previous year, mainly due to the increase in Enterprise and stc’s subsidiaries revenues. This was achieved in spite of the challenges that the group faced due to the decrease in revenues from roaming and Umrah & tourist visitors along with the increase in provisions for doubtful debts as a consequence of Corona virus pandemic.

Further, during the same period, we were able to increase the fiber optic customers’ base by 21% and broadband by 2.9%. In addition, data revenue increased by 8.6%.

As a testimony to stc’s leading position, and according to Forbes magazine, stc topped the telecom companies in the Middle East and North Africa (MENA) region and was ranked the first among telecom companies, fifth among all companies listed in the stock markets, and 335th globally. stc is also recognized as the most effective brand according to the MENA Effie Awards. These remarkable rankings are undoubtedly the result of the company's continuous growth over the past years and its commitment to its values and strategy, as well as the innovative solutions and services it provides.

In addition, as a leader in Information and Communication Technology, stc has been at the forefront of technological innovation in the kingdom. It has always invested in future technologies to ensure that it meets the growing needs of its customers by providing advanced technologies such as 4G and 5G. stc has been focusing its investment in 4G network over the last few years; which resulted in delivering the best service in terms of both coverage and quality, that meets customers’ expectation. stc has also embarked on the mission of being the pioneer in 5G technology, thru the continuous deployment of 5G in the kingdom. Moreover, in a move that can transform the way consumers use smart phones and devices across Saudi Arabia, stc is localizing the platform for E-SIM for the first time in the Kingdom by obtaining an international accreditation for rolling out E-SIM technology.

Lastly, the company recently published a sustainability report, which was prepared in accordance with the principles of the Global Reporting Initiative (GRI), where the company adopts best practices regarding the development and implementation of the sustainability strategy and disclosure of the company's performance in terms of environmental, social, and governance aspects along with building sustainable relationships with different stakeholders. The company has paid attention to the requirements of sustainable development in the long term, as the sustainability framework for stc has been prepared based on 7 key performance areas in alignment with stc DARE strategy. The details of sustainability report can be found through the official website of the company.

www.stc.com.sa

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