Tanmiah Food Profits Fell to SR3.7 mln during the 3Q, by 79%

Tanmiah Food Company net profit after zakat and tax declined to SR3.7 million during the third quarter, compared to SR17.5 million during the same quarter of the previous year, a rate of 78.86%.

His comes after Tanmiah Food Co. announced on Monday its interim financial results for the period ending on 2021-09-30 (nine months).

The operational profit amounted to SR11.4 million during the third quarter, compared to SR25.3 million during the same quarter of the previous year, a decrease of 54.94%.

The gross total profit amounted to SR85.1 million during the third quarter, compared to SR79.1 million during the same quarter of the previous year, an increase of 7.58%.

The net profit after zakat and tax during the current period amounted toSR 25.9 million, compared to SR44 million during the same period of the previous year, a decrease of 41.14%.

Profits per share during the current period amounted to SR1.3, compared to SR2.2 during the same period of the previous year.

The decrease in net profit during the current quarter compared to the same quarter of the previous year is due to the following reasons: • Increase in selling and distribution expenses, in line with the increase of capacity and volume .• Increase in general and administrative expenses.• Increase in cost of sales relative to revenue in line with the increased volume and unprecedented increase in grain prices in international commodities markets.

The increase in net profit for the current quarter as compared to the previous quarter is due to the following reasons: • Increase in revenue due to increase in volumes and average selling prices • Operating expenses in line with revenue.

The decrease in net profit during the current period compared to the same period of the previous year is due to the following reasons: • Increase in selling and distribution expenses, in line with the increase of capacity and volume. • Increase in general and administrative expenses.   • Increase in cost of sales relative to revenue in line with the increased volume and grain prices in international commodities markets. • Increase in sales in QSR business due to easing of covid restrictions.

Revenue in 9M21 increased by 27.8% year-on-year to SR 1.13 billion, and by 28.1% to SR 389.9 million in the third quarter compared to Q3 2020, driven mainly by higher volumes of fresh poultry and further processed products sales. This reflects continued growth in production and expansion of the customer base.

During 9M21 the Company was impacted by two major factors. Input costs increased as international grain prices on commodity markets grew significantly. Secondly, a lower subsidy received during reported period.

The Selling and distribution cost has increased due to the geographical expansion of our branches whereby Tanmiah has opened branches in the eastern and southern region.

Net Income was SR 3.7 million in the third quarter of fiscal year 2021, which compares to SR 17.5 million in the third quarter of 2020. Nine-month 2021 net income of SR 25.9 million compares to SR 44.0 million same period last year.

Growth strategy:

Tanmiah intends to grow its fresh chicken business in line with the Saudi government’s strategic goal of meeting 80% of local poultry demand domestically within the next five years.

The Saudi poultry market is moving towards self-sufficiency as domestic producers increase production supported by the Government in the form of direct and indirect subsidies, stricter import regulations on frozen poultry and growing consumer preferences for fresh locally produced poultry.

Tanmiah has increased its local sales of fresh chicken by 23% over the past three years from 66.3 million chickens in 2018 to 81.5 million in 2020 and till September 2021, the company has sold 73.7 million chickens so far as a result of reinvestment in its assets and operations.

The Company plans to further expand its capacity to serve growing local and regional demand. Planned capital expenditure in the next 5 years to increase feed milling, primary processing and further processing capacities intended to allow the Company to capture new and emerging growth opportunities.

The Company’s capital investments are expected to lead to higher revenues and margins due to the premium that end consumers are willing to pay for fresh domestically produced chicken meat.