• Food franchise operations quadruple revenues in 1H2023
  • Accolades acknowledge Tanmiah’s operational excellence and focus on sustainability and innovation
  • Strategic partnership with Halal Products Development Company

 Riyadh, Saudi Arabia - 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, announced its financial results for the first half ending 30 June 2023. Revenues increased 26.6% year on year (“YoY”) from SAR 776.7 million to SAR 983.1 million, supported by a 22.2% rise in fresh poultry sales. Gross margin was steady at 23%, while EBITDA of SAR 119.2 million (+45.4% YoY) yielded a margin of 12.1%. Meanwhile, net profit attributable to owners of the company increased 2.2% YoY from SAR 31.7 million to SAR 32.4 million. 

Zulfiqar Hamadani CEO of Tanmiah, commented: 

“Tanmiah achieved sustained revenue growth during the first half of 2023, with fresh poultry, animal feed and health, and food franchise operations all charting their upward trajectories. Our position as a prominent industry player, coupled with our collaborative association with globally renowned brands, have bolstered this performance.  

With a commitment to operational excellence reflected in our sustainability and innovation initiatives, we are delighted to have been honored with esteemed awards such as Forbes' Top 10 Innovative Companies in Sustainability and 2023's Product of the Year. These accolades mirror the growing consumer preference for our nutritious, high-quality products, produced and delivered sustainably by our dedicated team that is guiding the company’s path to success. 

Looking ahead, we remain focused on spearheading innovation and sustainability in the food sector, which will further enhance our positioning in the market, and enable Tanmiah to unlock a multitude of opportunities and reach new and exciting horizons.”

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

“Our progress during the first half of the year speaks to our dedication to fortifying the domestic food sector and supporting Saudi Arabia's journey towards becoming a global Halal hub. Our strategic partnership with Halal Products Development Company (HPDC), a subsidiary of the Public Investment Fund, is an exciting step toward reinforcing the Halal industry whilst enhancing its efficiency and innovation. Aligned with our commitment to supporting the Kingdom's food security objectives, this partnership underscores our dedication to both domestic and international impact in the Halal sector.  

We look forward to continuing to collaborate with prominent public and private sector organizations and through our unwavering focus on elevating our operational efficiencies, underpinned by our circular economy model, we aim to enhance the competitiveness of our products, and grow our market share, whilst generating sustainable returns for shareholders.” 

Revenue Analysis 

Tanmiah reported 1H2023 revenues of SAR 983.1 million, up 26.6% YoY from SAR 776.7 million in 1H2022, primarily due to continued growth across all segments, particularly fresh poultry. Food franchise operations also achieved a substantial improvement in revenues from SAR 9.8 million to SAR 37 million. 

Fresh Poultry sales, the key contributor to Tanmiah’s revenues (84%), increased 22.2% YoY in 1H2023 to SAR 825.7 million from SAR 675.9 million. The growth in revenues can be attributed to a continued rise in sales volumes as well as an increase in production capacity during the period, from 456,000 birds per day as at 31 December 2022, to 500,000 birds per day as at 30 June 2023.

Animal Feed and Health revenues increased 32.4% YoY to SAR 120.5 million from SAR 91.0 million, as a result of rising demand for animal health products and equipment.

Food franchise operator revenues nearly quadrupled from SAR 9.8 million to SAR 37 million in 1H2023, and during the period, Tanmiah opened 11 POPEYES® stores in the Kingdom, bringing the total to 31 operational outlets as of 30 June 2023. 

Income Statement Analysis

Cost of Sales increased 26.8% YoY to SAR 757.2 million in the first half of 2023, compared to SAR 597.1 million, as Tanmiah ramped up production and expanded its market reach . Meanwhile, gross profit increased 25.7% YoY to SAR 225.9 million, from SAR 179.7 million, in line with the continued rise in sales volumes; however, during the second quarter the Gross Profit faced pressure due to efforts for ramping up production and distribution capacity, which, despite improved volumes during the quarter had an impact on profits.

EBITDA increased from SAR 82.0 million in 1H2022 to SAR 119.2 million in 1H2023, supported by the strong revenue performance, which has outweighed the 12.7% YoY rise in selling, general, and administrative expenses.

Net Profit attributable to the owners of the company increased 2.2% from SAR 31.7 million to SAR 32.4 million in 1H2023. 

Balance Sheet Analysis  

Tanmiah ended the period with a cash position of SAR 285.0 million, compared to SAR 267.1 million as of 31 December 2022.

Total borrowings increased from SAR 308.4 million to SAR 449.5 million as of 30 June 2023.

Capex increased from SAR 41 million in 1H2022 to SAR 71 million in 1H2023. Planned capital expenditure in the next few years will focus on ramping up primary processing, feed milling and hatching capacities, in addition to expansion of food franchise operations, thus enabling the Company to seize new growth opportunities.  

Growth Strategy

Tanmiah’s fully integrated and highly efficient business model positions it for growth on local, regional, and global fronts, underpinned by favorable market trends. The global halal food market is expected to grow at an estimated CAGR of 10.8% during 2023-2028, according to industry reports.

The domestic operating environment is indeed conducive to growth and is driving the successful execution of the Company’s expansion plans. Saudi Arabia is looking to make investments valued at $20 billion by 2035 to boost the domestic food sector. It is also worth noting that by the end of the first half of 2023, the Agricultural Development Fund approved a significant number of credit facilities worth more than SAR 4.2 billion, that will primarily be allocated to reinforcing the Kingdom’s food security goals and ensuring the stability of food supply chains, in addition to developing the domestic agricultural sector.

Such strategic initiatives that are targeted at boosting the domestic food sector are placing Tanmiah on a solid path to capture several growth opportunities and further enhance its positioning in the market.

Diversification initiatives by the company include the growth of Tanmiah’s food franchise vertical, which was launched in 2021, underpinned by the Company’s strategy of expanding the footprint of POPEYES® across the Kingdom.

ESG Commitments

Tanmiah implements a strategic, and integrated approach to achieving environmental, economic, and social sustainability through its “Giving, Earning, and Sustaining model.”

The Company established its ESG Committee in 2022, which has finalized the focus areas that are aligned to the economic and social goals of the Kingdom’s Vision 2030 as well as the United Nations’ Sustainable Development Goals.

The Company aims to adopt a suitable international ESG reporting framework over the course of the year, whose objective is to provide meaningful and measurable disclosures to investors and other stakeholders about Tanmiah’s ESG activities, in alignment with international reporting standards.