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NCLE 1Q18/19 headline earnings up 4% Y-o-Y on margin gains; awarded SAR25.4mn construction contract for Dammam education complex

The National Company for Learning & Education (NCLE) [4291.SE] reported 1Q18/19 (ending 30 Nov 2018) results, with net income up 4% Y-o-Y to SAR11.5mn on better margins and lower tax provisions. Revenue for the quarter declined c3% Y-o-Y to SAR49.9mn. Meanwhile, gross margin expanded 2.4pp to 42.3%, with gross profit up 4% Y-o-Y to SAR21.1mn as cost of sales declined 7% Y-o-Y. Operating margin widened a tamer 40bps to 26.9%, with operating profit almost flat (-1% Y-o-Y) as SG&A expenses increased 12% Y-o-Y. On another note, the company announced that it awarded a SAR25.4mn contract to AGA Construction Company to establish a 20.5k sqm education complex in Dammam. The project is expected to be completed over a period of 18 months, with a capacity of 3k students. The contract is yet to be approved by the company’s GAM as the contractor is a related party.