Saudi Arabia’s Savola, a leading investment holding group for the food and retail sectors, has posted a net profit of SR200 million ($53.25 million) for the second-quarter (Q2) of 2021, said Al Rajhi Capital, a top financial services provider.
The gross margins reduced 110bps year-on-year (y-o-y) mainly due to 280bps margin dilution of food segment. The operating expenses declined by SR40 million y-o-y thereby supporting the EBIT margins a little which declined almost 200 bps y-o-y but remained flat q-o-q.
Savola’s retail business continue to witness several macro related headwinds such as lower consumer spending, lower store traffic and a high base last year. In food segment, the company reported a 19% y-o-y growth led mainly by growth in edible oil segment in KSA and Egypt.
“We expect the near-term headwinds to continue for grocery business however we expect a consolidation in the food segment as many smaller players would exit due to rising commodity prices, this should benefit Savola over the longer term,” said the Al Rajhi Capital report.
“Post Q2 2021 earnings we revise our forecast and slightly revise our tp upwards from SR39/share to SR40/share and maintain our ‘neutral’ rating.” – TradeArabia News Service
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