Strategy Note /
Saudi Arabia

SGS Earnings Call Summary – Q3 22

  • Revenue stood at SAR555mn, up 31.9% yoy (+12.0% qoq)

  • The total number of flights served was 24,968 in September 2022.

  • Compared to global recovery, SGS stood at 85% on a cumulative basis in 2022.    

Iyad Khalid Ghulam
Iyad Khalid Ghulam

Head of Equity Research

SNB Capital
16 November 2022
Published bySNB Capital

Q3 2022 results

  • Revenue stood at SAR555mn, up 31.9% yoy (+12.0% qoq). The growth is due to recovery in the business activity post the lifting of COVID-19 restrictions, Hajj and holiday seasons.

  • Gross profit came in at SAR48mn, down 16.6% yoy (-8.9% qoq) while gross margins contracted to 8.6% in Q3 22 vs 10.5% in Q2 22. The qoq increase in costs was driven by seasonal employees during Hajj. These costs are non-recurring in nature. In absolute terms, Hajj costs increased by SAR23mn yoy and SAR11mn qoq.

  • Operating loss came in at SAR20mn vs losses of SAR29mn and SAR11mn in Q3 21 and Q2 22, respectively.

  • Net loss stood at SAR51mn vs losses of SAR43mn and SAR67mn in Q3 21 and Q2 22 respectively.



  • Q3 22 operations continued to improve. The overall level of operations stood at 95% in September 2022, with international and domestic operations level reaching 100% and 91%, respectively.

  • The total number of flights served was 24,968 in September 2022.

  • Compared to global recovery, SGS stood at 85% on a cumulative basis in 2022.     

  • Airport wise, Riyad operated at 104% followed by Jeddah at 99%, Dammam at 90% and Medina at 64% (due to seasonality). Domestic airports operated at 91% vs 2019 baseline.



  • SGS has a current ratio of 2.64x and quick ratio of 2.09x.

  • Debt to equity stood at 33% while the gearing ratio was 1.69x at the end of Q3 22.

  • SGS has a cash balance of SAR1.11bn, of which SAR1.04bn (94%) is in mutual funds and SAR67mn (6%) is in cash.

  • The total debt declined to SAR700mn (down 45% yoy) and is compliant with all covenants.

  • The September 2022 consolidated collection as a % of revenue stood at 97% vs 90% in 2021, while the related party collection as a % of revenue stood at 97% vs 87% in 2021. Other airlines collection was 98% of revenue vs 100% in 2021.


Other highlights

  • The operating levels at Riyadh improved due to the ongoing movement of corporate headquarters to Riyadh.

  • The management clarified that the pricing change is a result of the  mix of revenue in terms of low cost carriers vs full service carriers and national vs international carriers.

  • SGS is in the process of launching new services like Meet and Greet services at Riyadh airport (started in October 2022), serving the VIP segments in Jeddah and excess baggage services.

  • The level of recovery of Hajj was at 38-40% compared to 2019 levels. However, Hajj related costs were prepared based on full capacity. This led to lower gross margins for SGS in Q3 22.

  • The management highlighted that the absence of SANED subsidies this year also contributed to the yoy increase in costs.



  • In 2023f, the management expects further improvement in flights activity compared to 2022f. This should lead to better margins and return to profitability.

  • The management expects the tourism initiatives along with Hajj and Umrah services to lead to higher recovery in 2023f and 2024f.

  • SGS expects low-cost carriers to expand at a faster pace.

  • The management confirmed that SGS is ready for business growth in 2023f in terms of training and complying with IATA and GACA requirements.

  • The management does not expect any goodwill impairments soon.

  • SGS doesn’t anticipate recurring zakat settlements in the coming period. However, the company is dealing with zakat settlement committee for certain amounts, and if not satisfied with the outcome it will appeal.

  • SGS will be looking to win contracts from Saudi’s new airline once it is established.