Saudi Dairy Foodstuff Company (SADAFCO) has seen “minimal impact” so far of the coronavirus pandemic on its finances despite the overall decline in consumer spending, the company said on Sunday.

The Saudi-listed firm, which reported a net profit of SR265 million ($70 million) during the 12-month period ending on March 31, also assured that its assets remain operational despite the disruptions caused by the health pandemic.

“The outbreak of COVID-19 has a minimal impact on our results from 2019/2020 as it only really started being felt in the last fortnight in March. Our [priority] during this time is the safety and wellbeing of our employees, their families, the community we operate in and our stakeholders,” the company added.

“Our depots and factories have continued to run, in accordance with the prevailing government guidelines, as we seek to ensure our customers continue to receive [their products],” it added.

The fast-spreading virus, which has now infected more than 3.4 million people, has led to widespread lockdowns and border closures. Some factories shut down operations, while non-essential businesses closed their doors to contain the spread of the virus.

Consumers have consequently retreated to their homes and cut back on spending on non-essential items. However, despite the disruptions, SADAFCO’s figures showed that demand for dairy products increased during the beginning of the outbreak.

The company enjoyed a 14 percent increase in net sales of milk, while ice cream sales went up 15 percent during the 12-month period ending March 31 this year.  Sales of tomato paste also jumped 6 percent.

SADAFCO did not specify if the intense stockpiling of essential goods by consumers at the start of the outbreak had helped fuel their sales.

“Higher milk sales were primarily driven by less intense discounting (same high frequency of promotions, less deep reductions), which was seen across the category,” the company said.

At the same time, margins improved from 32 percent to 33.5 percent. This was driven by “lower promotional intensity” in the milk category and higher proportion of sales of ice cream, delivered through distribution expansion across the company’s markets.

The number coronavirus cases continues to rise in Saudi Arabia, but the kingdom has recently allowed commercial establishments, including malls, to reopen to reduce the financial toll of the global pandemic.

Minister of Finance and Acting Minister of Economy and Planning, Mohammed bin Abdullah Al-Jadaan, said on Saturday that the economic toll of the health crisis is likely to be felt in the coming quarters.

He, however, noted that there has been a significant decline in revenues amid falling oil prices. Non-oil revenues are also expected to drop as a result of the huge reduction in economic activity.

(Writing by Cleofe Maceda; editing by Seban Scaria)


Disclaimer: This article is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Read our full disclaimer policy here.

© ZAWYA 2020