SADAFCO’s Profits Fell to SR54 Million during the 2Q by 23%

The net profit after zakat and tax for the Saudi Dairy and Food Products Company “SADAFCO” decreased to 53.7 million riyals during the second quarter of its fiscal year, compared to 70.26 million riyals during the same quarter of the previous year, by 23.56%.

This came following the company’s announcement on Thursday of its interim financial results for the period ending on 2021-09-30 (Six Months).

As for the operating profit, it amounted to SR59.18 million during the first quarter, compared to SR74.4 million during the same quarter of the previous year, a decrease of 20.46%.

The gross profit amounted to SR161.54 million during the first quarter, compared to SR176.92 million during the same quarter of the previous year, a decrease of 8.69%.

The profits during the first six months of the company’s fiscal year amounted to SR91.7 million, compared to SR140.79 million in the corresponding period of the previous year, a decline of 34.87%.

Profits per share during the current period amounted to SR2.88, compared to SR4.4 during the same period of the previous year.

Arriyadh Development Co. announces its Interim Financial Results for the Period Ending on 2021-09-30 (Nine Months)

“Referring to our Q1 commentary we had identified various adverse macro level factors which affected our previous quarter results. We see easing of some elements, such as a) school opening, b) relaxation of covid restrictions, c) reduction in irrational pricing behavior, all leading to better business dynamics.” the company said.

It added that in 2022, SADAFCO expects cost of raw materials to remain firm and up. International logistics will remain challenging. Despite all this, we have been able to serve the market in an adequate manner.

Net Profit for the quarter is at healthy 10%, a significant improvement over last quarter. Net profit margin for same quarter last year was 13% due to lower cost of raw materials and logistic costs.

“We have been successful in maintaining the revenue in line with last year, as new products have started delivering benefits.” it pointed out.

The gross margin of 31% this year vs. 33% same quarter last year despite all the challenges, driven mainly by higher contribution of more profitable Ice Cream business.

Net profit in this quarter is SR 16 mln higher than the previous quarter due to better product and channel mix coupled with lower employee related accruals which had been made during Covid and until last quarter. The profit of SR 54 mln is at 10% of sales and higher due to increased sales vs previous quarter.

Net profit in the period was SR 91.7 mln, which is SR 49 mln (35%) below the same period last year. This is a result of lower sales value driven by favorable Covid related tailwinds last year (especially in Q1), higher raw materials prices and VAT imposition since Q2 last year.

“Last year Q1 had VAT of 5% while this year 15% VAT has been in place throughout this year resulting in lower selling price/liter vs last year. However, we do see early signs of reduced irrational pricing behavior leading to improved market dynamics.” it said.

Also, this year SADAFCO had a favorable product and channel mix. Overall, this resulted in GPC of 31% vs. 33% last year despite the higher raw material costs. The sales and distribution expenses increased marginally to 15% vs. 14% last year due to increase in routes and distribution focus.

SADAFCO has been awarded use of the prestigious “Saudi Made” logo which is being rolled out. “Work on New Ice Cream Factory continues at full pace. We started trial production with commercial production expected in Q1’22. The upgrade project of Jeddah Milk Factory is expected to be completed end of this year. This project caters to capacity increase at improved efficiency levels”.

SADAFCO reiterated that it continues to generate healthy cashflow leading to a strong cash position of SAR 619 Mln contributing to a robust financial position.

Shareholders’ equity up at a healthy SR1.532 bln vs SR1.517 bln at 30 Sep 2021.

The earnings per share are calculated as follows:

Profit attributable to owners of SADAFCO SR 92,205,000, total shares 32,500,000, treasury shares held by the Company 500,250, total shares outstanding 31,999,750 and earnings per share (EPS) reached SR2.88.