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Saudi Arabia’s Almarai will remain cautious for the rest of the year and in 2021 despite a surge in sales and revenue in September.
The Gulf’s largest dairy company reported on Sunday a 6.9 percent increase in the consolidated profit attributable to shareholders and an 8.1 percent rise in sales/ revenue for the third quarter of the year compared to the same period last year.
The dairy giant also described its performance during the first nine months of the year as robust, despite the challenges posed by the health outbreak, thanks in part to the increase in revenues in its products across nearly all categories.
The dairy maker has had a productive third quarter despite challenges, including the introduction of higher value-added tax (VAT) rate in the kingdom, with sales surging to nearly 4 billion Saudi riyals.
“Despite the robust performance in first nine months of 2020, Almarai remains cautious for the balance of the year and year 2021 due to significant economic challenges facing the industry driven by expected population decline, lower GDP growth due to COVIDD-19 and labour reforms,” Almarai said in a bourse filing at the Saudi Stock Exchange (Tadawul).
The company said it is developing multiple scenarios to manage these impacts, adding that it will roll out additional plans during the year to ensure uninterrupted supply to customers, while maintaining a “healthy return” for its shareholders.
Challenges
Almarai said the first nine months of the year have been “quite challenging” for the company. Although the coronavirus lockdown was lifted in the second quarter of the year, it said that the decision to triple the value-added tax in Saudi Arabia posed some “commercial impediments”.
It also noted that the volume growth in the Gulf region has weakened due to lower tourism and “competitiveness pressures”.
However, despite the challenges, the firm said its business model has demonstrated its resilience, as shown by the growth in all its product segments.
Certain markets, such as Saudi Arabia, Jordan, Egypt and Kuwait has also demonstrated significant volume growth, while the continual reduction in debt balance has provided additional savings for the company through lower funding costs.
Financial results
The company’s sales/ revenue went up by 8.11 percent to 3.8 billion Saudi riyals during the three months ending September 30, 2020.
Its net profit jumped by nearly 7 percent to 621.5 million riyals during the same period
(Reporting by Cleofe Maceda; editing by Mily Chakrabarty)
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© ZAWYA 2020
