Almarai Company’s Q4 Profits Surge by 4%, Recording a Gain of SAR371 Million

The net profit after zakat and tax for Almarai Company grew to SAR 371 mln during the fourth quarter, compared to SAR 356 mln in the same quarter of last year, by 4%. This followed today’s announcement of the consolidated annual financial results for the period ending on December 31, 2023 (12 months).

The operating profit reached 529 million riyals in the fourth quarter, compared to 504 million riyals in the same quarter of last year, an increase of 5%.

The company achieved revenues of SAR 4.9 bln in Q4, compared to SAR 4.83 bln in the same quarter of last year, a slight increase of 2%.

The net profit after zakat and tax in the 12-month period amounted to SAR 2.05 bln, compared to SAR 1.75 bln in the same period last year, an increase of 16.4%.

The earnings per share during the current period amounted to SAR 2.08, compared to SAR 1.79 in the same period last year.

The 2% increase in revenues for the current quarter compared to the same quarter of the previous year is mainly due to:

The positive performance in core GCC markets, led by Saudi Arabia, resulted in quarterly growth of 5%. The growth was driven mainly by positive contributions from the poultry and dairy categories. However, Almarai group revenue growth was reduced to 2% due to lower sales of commodities in North America and lower contribution from Egypt due to the Egyptian Pound devaluation.

The increase of 4% in the consolidated profit attributable to shareholders of the company as compared to the corresponding quarter of last year is due to:

• Operating Profit (+5%): Operating profit increased by 5% due to revenue growth, accompanied by stabilised commodity costs and well-managed operating costs.

• Net Profit (+4%): Despite higher funding costs, net profit for the fourth quarter of 2023 increased by 4%, mainly due to the higher operating profit and partly due to the synergies driven by the 100% acquisition of Egypt and Jordan business earlier in the year.

The contribution of various business categories towards the increase in the consolidated profit attributable to Shareholders of 4% is as follows:

• Dairy & Juice Category: Net profit increased compared to last year due to improved sales in key markets in the Gulf countries and strict controls over costs.

• Bakery Category: Higher net profit versus 2023 driven by revenue growth led by bread and single-serve products.

• Poultry Category: Higher net profit versus 2023 due to positive volume growth supported from increased production capacity availability early in the year.

The reason for the increase in the sales/revenues during the current quarter compared to the previous one by 3% in revenue for the fourth quarter of 2023 (SAR 4,920 mln), as compared to Q3 of 2023 (SAR 4,797 mln) is due to higher sales of dairy food products driven by seasonal demand and higher poultry products driven by supply increases.

The reason for the increase in the net profit (loss) during the current quarter compared to the previous one by 24% and the consolidated profit attributable to the company’s shareholders for Q4 2023 (SAR 371 mln), as compared to Q3 of 2023 (SAR 486 mln) is due to seasonal adjustments in consumption patterns.

The reason for the increase of 5% for the current year compared to last year, 2022, in revenues is:

The 5% increase in Revenue in the current year, 2023 as compared to last year, 2022 is due to:

The strong performance in core GCC markets resulted in a growth of 8% for the group, led by the poultry and dairy categories. However, the net revenue growth at the group level was reduced to 5% due to the devaluation of the Egyptian Pound and lower sales of feed from the USA operations.

The 16% increase in consolidated profits attributable to the company’s shareholders in the current year, 2023 as compared to the last year, 2022 is due to:

• Operating Profit (+18%): Revenue growth supported by cost control and stable commodity costs contributed to operating profit growth of 18% during the current year. The results improved due to the expansion of the poultry category, the launch of several new products and the effect of the increased direct marketing communication with consumers.

• Net Profit Attributable to Shareholders (+16%): Shareholder net profit for the current year was higher than last year due to positive operating profit growth and the acquisition of a 100% share of the Group’s operations in Egypt and Jordan, despite higher funding costs due to higher interest rates.

The contribution of main business categories towards the 16% increase in the consolidated profit attributable to shareholders is as follows:

• Dairy & Juice Category: Net profit increased compared to the previous year due to improved sales in the GCC countries and strict cost controls contributing to the category’s net profit growth. The strong results were achieved whilst managing the impact of the Egyptian pound devaluation in this business category.

• Bakery Category: Higher net profit is driven by both volume and sales growth. The top-line growth was driven by multiple factors, including improved sales in Bread along with growth in single-serve products, product innovation, and economies of scale.

• Poultry Category: The increase in net profit was driven by sales growth aided by additional production capacity and improved operational efficiency.

Unmodified statement of the type of external auditor’s report

Any comments mentioned in the external auditor’s report, mentioned in any of the following paragraphs (other matter, conservation, notice, disclaimer of opinion, or adverse opinion) as per the auditor report of the consolidated statements for the year ended on December 31, 2022, were revised by a different auditor who gave a non-edited on these consolidated statements on Jumadal-Akhirah 29, 1444H (corresponding to January 22, 2023).

Comparison Items were reclassified. For more information, please see note 2.1 in the consolidated financial statements for the Year ended December 31st, 2023.

Additional Information and general comment:

Stable market environment and strong trading performance have enabled Almarai to post solid growth in profits exceeding SAR 2 bln.

Almarai rolled out multiple new products during 2023 and has provided earlier guidance for its plan to enter Seafood and Frozen Bakery business. The expansion of its product portfolio, sustained investment in consumer communication and continual focus on operational efficiency have assisted Almarai to achieve this progressive growth in net profit.

Going forward, Almarai expects its core business to continue to gain market share in selected product categories and geographies, explore additional opportunities to grow inorganically and deploy capital in line with its 5 years investment strategy.