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Saudi Arabia’s Almarai, the Middle East’s largest dairy company, which on Sunday reported Q4 2023 net profit growth of more than 4% year-on-year (YoY) to 370.72 million Saudi riyals ($98.84 million), missed consensus and Ubhar Capital's expectations by 18% and 14% respectively, the brokerage said in a note on Monday.
While the company’s operating and net profit growth came somewhat below expectations, its latest results indicate an improvement in the operating environment backed by continued softening in commodity prices, the note said.
Overall reveue grew 5% YoY in the core GCC markets, supported by the dairy and poultry segments. "However, reduced sales in North America, and Egypt owing to a devaluation of the Egyptian pound, reduced the revenue growth at the group level to around 2% YoY," analyst Neetika Gupta said.
In FY 2023, Almarai’s top line grew 4.6% YoY to SAR 19.6 billion.
"In 2024, we expect Almarai to witness further earnings expansion going forward, given its aim to enhance its market share in some of its product segments and geographies while also exploring inorganic growth opportunities," analyst Neetika Gupta said.
The brokerage maintained 'Hold' rating on the stock and a target price of SAR 61 per share.
(Writing by Brinda Darasha; editing by Seban Scaria)
