‎“Almarai” profits surge to SR636 mln during Q1, by 51%‎

The net profit after zakat and tax of Almarai Company rose to 636 million riyals during the first quarter, compared to 422 million riyals in the same quarter of last year, by 51% (three months).

The operational profit amounted to 803 million riyals in the first quarter, compared to 547 million riyals in the same quarter of the previous year, with a growth of 47%.

As for the total profit, it amounted to 1.6 billion riyals in the first quarter, compared to 1.33 billion riyals in the same quarter of the previous year, an increase of 21%.

Earnings per share in the current period amounted to 0.65 riyals, compared to 0.43 riyals in the same period last year.

The reason for the increase by 51% in the net profit attributable to the shareholders of the company compared to the same quarter of the previous year is mainly due to:

Gains related to entering the first 10 days of Ramadan in the first quarter, in addition to a (one-time) subsidy in exchange for food security measures taken by Almarai: the amount of these one-time gains and subsidies is 149 million Saudi riyals (which represents a growth of 35% in net profit on an annual basis).

The company’s normal adjusted profit growth increased by 16% due to:

1. Revenue (+9%): Strong revenue growth was evident across all countries, products and channels at the local currency level. Egypt’s revenues in Saudi riyals decreased on an annual basis due to the impact of the depreciation of the Egyptian pound.
2. Operating Profit (+19%): Global commodity cost was stable in the current quarter compared to earlier costs especially related to feed raw materials (corn, soybean and alfalfa) however higher inventory coverage continued to impact cost of goods sold . Good cost control, especially for sales and marketing as well as for general and administrative expenses, contributed significantly to the growth in operating profits.
3. Net profit (+16%): Net profit growth was lower than operating profit growth due to the increase in financing cost in line with the increase in SIBOR interest rates.

The comparative quarterly results for the main operating sectors, which led to an increase in the net profit attributable to the shareholders of the company by 16%, are as follows:

Dairy and juice sector: The sector’s profits increased by 8% (revenue increased by 6%) and sales growth on an annual basis was offset by cost inflation, especially in dairy and fodder commodities.

Bakery segment: Net profit increased by 29% (revenue increased by 9%) due to positive growth in sales volume and fixed cost leverage.

Poultry segment: Positive growth in sales volume due to additional available capacity resulted in revenue growth of 25% and normal adjusted net income growth of 38%.

Other activities: losses of 16 million Saudi riyals were recorded, driven by stable agricultural performance, compared to a loss of 15 million Saudi riyals in the same period last year.

The reason for the increase by 78% in the net profit attributable to the shareholders of the company during the first quarter of this year (635 million riyals) compared to the previous quarter (356 million riyals) is due to the seasonal change in consumption patterns, and the entry of the first 10 days of the month of Ramadan in The first quarter, and one-time gains in the current quarter

Almarai also announced a good performance for the first quarter of 2023, as positive revenue growth was observed in all product categories and in all geographical areas in local currency terms. We expect this positive momentum to continue, driven by the expansion of the poultry sector and the stability of the macroeconomic momentum.

Key inflation risks for dairy and feed commodities continue to show signs of stabilizing over the past two quarters. Almarai will continue to manage these risks through better hedging activities and optimizing inventory utilization.

The company drew the attention of shareholders, that the preliminary condensed consolidated financial statements for the period ending on March 31, 2023 AD, will be available on the investor relations application of Almarai Company for smartphones and tablets, and through the company’s website at the following link, after sending it to the competent authorities.

Reports and financial information | Almarai (almarai.com).

The phone meeting with analysts and investors will take place on April 12, 2023 AD, at 2:00 pm, Saudi Arabian time.

The presentation accompanying the phone meeting will be available on Almarai’s website under the Investors section and under the Shareholders’ Offers section.