Saudi Arabia’s Almarai, the largest dairy company in the Gulf, reported a 34 percent fall in third-quarter net profit on Sunday.
From July to September this year, Almarai made a profit of 409.1 million riyals ($109 million), down from 621.5 million riyals in the same period last year, a statement to the Saudi Stock Exchange (Tadawul) said. Sales for the quarter, however, reached 3.9 billion riyals, slightly up by 2 percent from 3.8 billion riyals a year ago.
According to the company, the coronavirus pandemic, coupled with high commodity costs and value-added tax (VAT), continued to impact the business.
Revenues of some core products within the Gulf region, the firm said, had dropped despite efforts to return to normality, although other markets like Egypt and Jordan are offsetting the decline.
“Almarai faced a challenging quarter due to the base year effect of COVID-19 and rising commodity costs. Despite continued normalisation post COVID-19 restrictions, core product revenues dropped by 3 percent within GCC countries,” the statement said.
“[Revenue] growth in Egypt, Jordan and non-branded product is offsetting the decline in our core categories in GCC countries.”
The drop was more significant within the food category due to one-off purchase made by the company last year. The GCC revenue decline was partially offset by growth in bakery sales due to partial opening of schools.
The company’s dairy and juice business recorded a 30.2 percent decline in profit due to higher feed expenses of corn, as well as soya cost increase and lower subsidy.
The poultry business also suffered a huge slump in profit, estimated to be more than 50 percent. However, Almarai recorded a 19.1 percent increase in profit for the bakery category.
(Reporting by Cleofe Maceda; editing by Seban Scaria )
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