Saudi Arabian diary giant Almarai is bullish on 2021 even as its recent quarter-on-quarter consolidated profit slumped by nearly half due to lower sales.
The company’s profit for the fourth quarter of 2020 fell 46 percent to 335.9 million Saudi riyals ($89.6 million), when compared to the previous quarter due to a seasonal fall in sales. Profit for the same period, however, was up 7.7 percent when compared to 2019.
In a statement to the Saudi Stock Exchange (Tadawul), on which its shares trade, Almarai said it remains positive about its finances this year, as it undertakes a business strategy that includes the development of new products, entering new markets and channel expansion.
“Almarai continues with a focused business strategy on top line growth driven by channel expansion, new product development, pricing rationalisation and new geographies while also focusing on tight cost control,” the company said.
“The positive free cash flow in 2020 is expected to continue its momentum in the year ahead and we expect to further strengthen our balance sheet with renewed focus on profitability and working capital management.
The company counts Saudi Arabia’s wealth fund (PIF) and food products company Savola Group among its investors. Its third-quarter 2020 net profit had fallen by 3.5 percent, which was also attributed to a “seasonal” decline in demand.
Revenue by region
Almarai said its 7.7 percent year-on-year profit is due to a 3.1 percent revenue growth driven by sales of fresh and “Long Life” dairy products, as well as alfalfa, a forage crop. The growth was fuelled mainly by markets in Egypt, Jordan and other export countries.
When compared to the last quarter of 2019, the company’s Q4 2020 revenue fell in Saudi Arabia and GCC countries by 1 percent and 3.1 percent, respectively.
Compared year on year, the company’s Q4 2020 revenue increased 5.6 percent in Saudi Arabia, while other GCC markets posted a 1.1 percent growth. For other countries, revenue growth was 29.2 percent.
Looking at the key business segments, the company was doing well in the dairy and juice, and poultry categories, which posted profit growth of 3.2 percent and 30 percent, respectively.
Its bakery business, however, posted a decline of 4 percent in profit as “single serve sales” dropped due to school closures.
(Reporting by Cleofe Maceda; editing by Seban Scaria)
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© ZAWYA 2021