Saudi Arabia's Sadafco net profit rises to $14.6mln in Q3

Lower international commodity prices combined with favorable sales growth across its various categories has enabled, Saudia Dairy and Foodstuff Company (Sadafco) to announce a net profit of SR54 million during the three-month period ending on 30 September 2018. This was SR4 million higher than the achievement last quarter, on the back of 4.6% higher sales.

“Despite the current challenging market environment, Sadafco continues to strengthen its premium branded position and realise its financial goals,” said Wout Matthijs, CEO of Sadafco. “We are also focused on investing in expanding our future product portfolio, which will further contribute to our success in the years to come.”

In the half year, April to September 2018, net sales were down -6% excluding Melkoma, resulting from multiple headwinds (expat departure, higher labor costs, higher cost of living and lower consumer confidence). In addition, the domestic milk category has a glut of supply driving irrational price discounting by our customers, which we have sought to contend with.

During the last quarter, Sadafco acquired 76% of the Polish dairy powder producer Mlekoma Group for a transaction valued at SR120 million. The acquisition will contribute towards delivery of powdered raw materials and blended semi-finished goods mixes for our use in the future.

Strong working capital ratios and free cash of SR484 million with zero debt, following our acquisition, meant Sadafco will continue to enhance shareholders value. Shareholder equity for the period was valued atSR1.338 billion, a 1% increase in comparison to the same period last year (SR 1.321 billion).

Furthermore, Sadafco is expected to launch the new Jeddah Central Warehouse by the end of 2018. The project, worthSR145 million, is expected to deliver future cost savings and improved effectiveness in the company’s supply chain.

Established in 1976, Sadafco is a leader in dairy and foodstuff manufacturing, importing, distributing and marketing in Saudi Arabia and has established a strong reputation and loyal following in the food and beverage industry across the GCC region. — SG