Lazurde CEO says jewelry sees strong demand in Saudi Arabia, Egypt

Sélim Chidiac CEO of Lazurde Company for Jewelry

Gold products witness strong demand, particularly in Egypt, Sélim Chidiac, CEO of Lazurde Company for Jewelry, told Argaam in a phone call.

He added that the company has a strong position and distinguished brand, which encourage clients to purchase its products. In addition, gold is considered a safe haven against high inflation rates.

Low-weight jewelry also witnesses strong demand in Saudi Arabia, Chidiac said, noting that the group has more than 75 branches in Saudi Arabia and Egypt.

Commenting on Q3 2022 financial results, the top executive said the group continued to report better figures compared with a year earlier. He added that the third-quarter net earnings were buoyed by a 5.1% rise in the group's revenues, in addition to an improvement in gross profit margin that rose to 62.5% from 61.6% in Q3 2021.

When asked about the impact of interest-rate hike on the company, the CEO said financing costs increased by almost 29% year-on-year (YoY) to SAR 8.4 million, mainly due to the growth in working capital as a result of strong sales and interest-rate hike.

Most of the group's financing costs are related to getting gold from banks, whose financing costs are not closely related to interest-rate hikes, Chidiac said. He added that the recent and potential increase in interest rates will unlikely raise financing costs of gold.

E-commerce dominates a strong share of the company's business and has robust growth potential, as it recorded SAR 9.2 million sales in Q3 2022, compared to SAR 6.2 million a year earlier. This represents a big share of 6.7% of the group's total operating revenues and 15.6% of retail revenues in Q3 2022, compared to 4.8% of total operating revenues and 10.7% of retail revenues in Q3 2021.

When asked about his forecasts for Q4 2022, Chidiac said wholesale usually increases in the first half of the year due to seasonality, adding that the firm witnesses more consistent performance throughout the year, thanks to the development in the retail and e-commerce business.

Lazurde reported a 21% rise in 9M 2022 net profit after Zakat and tax to SAR 31.4 million, compared to SAR 26 million in the year-ago period. In Q3 2022, net profit after Zakat and tax climbed 18% to SAR 9.2 million, from SAR 7.80 million in Q3 2021.