Tanmiah reports 20% growth in revenues in 1Q2024, with strong profitability

Tanmiah Food Company (“Tanmiah” or the “Company”, 2281 on the Saudi Exchange), a market-leading provider of fresh and processed poultry and other meat products, animal feed and health products, and a foods brand franchise operator, today announced its results for the first quarter ending 31 March 2024, reporting a robust 20% year-on-year (YoY) growth in revenues to SAR  581.4 million, primarily due to an 18% rise in fresh poultry sales. EBITDA witnessed an increase of 17.8% to SAR 78.0 million, while net profit attributable to owners of the Company remained unchanged at SAR 21.0 million in 1Q2024.

Zulfiqar Hamadani CEO of Tanmiah, commented:

“Tanmiah has initiated the year with a solid performance across all the segments of the business, witnessing a substantial improvement in revenues during the quarter. With fresh poultry continuing to lead this growth, we are also delighted by the ongoing success of our food franchise operations across the Kingdom.

In line with our strong commitment to adopting the highest standards of food safety and quality, we are pleased to be the first poultry producer in Saudi Arabia to have achieved the highest BRCGS AA+ International Quality Certification. This remarkable milestone is a testament to the hard work and dedication of our team, and Tanmiah’s uncompromising focus on food safety and operational excellence in everything we do.

Looking ahead, the strength and agility of our business model, complemented with key collaborations with best-in-class companies worldwide are set to chart the course for further growth and development for Tanmiah, within the region and beyond.”

We remain on track to achieving our growth objectives across our different business segments while continuing to play a key role in strengthening the Kingdom’s position as a global halal hub, through key partnerships that foster innovation and sustainability, empower local talent, and grow the global halal market

The path ahead of us is indeed promising as we remain steadfast in exploring further avenues of

growth for Tanmiah whilst reinforcing our pioneering role in supporting the fundamental objectives of food security and self-sufficiency under the agenda of the Kingdom’s Vision 2030.”

Summary Financial Highlights

Ahmed bin Sharaf Osilan, Executive Board Member and Managing Director of Tanmiah, said:

“We are witnessing yet another solid quarter for Tanmiah, where our progressive growth within the food sector remains, as we continue to make strides towards our strategic goal of becoming the number one global halal sustainable healthy protein Company by 2030. This is largely supported by our unwavering focus on fostering innovation, enhancing operational excellence, and driving sustainable food production across all stages of the value chain.”

Segmental Revenue Analysis

Tanmiah announced revenues of SAR 581.4 million in 1Q2024, up 20.0% YoY from SAR 484.5 million. This was predominantly the result of a continued growth in sales volumes, particularly fresh poultry, wider geographical coverage, focused marketing, and enhanced channel expansion.

Fresh Poultry sales, the key contributor to Tanmiah’s revenues (83%), increased 18.3% YoY in 1Q2024 to SAR 480.4 million. This positive performance is supported by an improvement in sales volumes, on the back of an expansion in Tanmiah’s production capacity, from 475,000 birds per day as of 31 March 2023 to 500,000 birds per day as of 31 March 2024.

Animal Feed and Health revenues grew 17.7% YoY to SAR 72.5 million from SAR 61.5 million, due to the sustained increase in demand for animal health products and equipment.

Food franchise operator revenues increased 67.5% to SAR 28.5 million in 1Q2024, from SAR 17.0 million in 1Q2023. During the quarter, Tanmiah opened 2 POPEYES® stores across the Kingdom, bringing the total to 54 operational outlets as of 31 March 2024.

Income Statement Analysis

Cost of Sales increased 19.9% YoY to SAR 436.9 million in 1Q2024, from SAR 364.5 million, driven by the Company’s sustained expansion of fresh chicken production capacity, a rise in sales volumes, and the increase in the number of Popeyes stores. Gross profit increased 20.4% YoY to SAR 144.5 million from SAR 120.0 million in 1Q2023.

EBITDA witnessed an improvement of 17.8% to SAR 78.0 million in 1Q2024, compared to SAR 66.2 million in 1Q2023, in line with the robust revenue performance.

Net Profit attributable to the owners of the Company remained largely unchanged at SAR 21.0 million in 1Q2024, but it is worth mentioning that net profit for 1Q2023 included a one-off subsidy amounting to SAR 15.29 million.

Balance Sheet Analysis

Tanmiah ended the period with SAR 158.7 million in cash and cash equivalents.

Total borrowings increased to SAR 423.1 million as of 31 March 2024, from SAR 410.6 million at the end of 2023.

Capex increased from SAR 37.2 million in 1Q2023 to SAR 58.4 million in 1Q2024. Planned capital expenditure in the next five years will focus on ramping up primary processing, feed milling and hatching capacities, in addition to expanding food franchise operations, thus enabling the Company to seize new growth opportunities.

ESG Commitments

Tanmiah implements a strategic and integrated approach to achieving environmental, economic,

and social sustainability, underpinned by its Omnipreneurship philosophy of giving, earning and sustaining.

The Company has a Board ESG Committee that a management-level cross-functional committee supports. With a strengthened governance structure, we finalized our ESG roadmap and strategy, with core focus areas aligned to the economic and social goals of the Kingdom’s Vision 2030 and the United Nations’ Sustainable Development Goals. Complete details are available in our inaugural Sustainability Report.

With a vision to become the number one global halal sustainable healthy protein Company by 2030, the strategy is based on three pillars: Sustaining People, Sustaining Agriculture and Sustaining the Planet.

Tanmiah has undertaken a double-materiality approach to define its sustainability strategy and ensure that it focuses on relevant risk areas where it could create value for both the Company and its stakeholders. Looking ahead, we are further strengthening our sustainability governance, progressing our people agenda, advancing animal welfare, gaining efficiencies in resources and water use, working towards carbon neutrality, and expanding sustainable packaging.