Saudi Arabia's Almarai, the Middle East's largest dairy company, plans to invest 405 million Saudi riyals ($108m) to drive its expansion into the seafood business and to secure poultry supplies as part of the kingdom's focus on food security.
The dairy company's board of directors approved an initial investment of 252m riyals into the seafood processing business, which Almarai will finance from operating cash flows, the company said in a filing to the Tadawul stock exchange on Tuesday.
The investment plan will expand Almarai's product range and contribute to the kingdom's “food security agenda as per vision 2030", the company said.
The expected time frame of the seafood investment is 24 months from the date of final regulatory approval.
Saudi Arabia has been increasingly focused on bolstering its food security through investments in local manufacturing and agricultural technology start-ups.
The Russia-Ukraine crisis has led to an increase in the prices of basic commodities, particularly in countries that depend on the two nations for their supplies.
Almarai will also invest 153m riyals to secure parent poultry birds supply to mitigate the “imminent risk” of parent stock shortages in the kingdom, it said in a separate filing to the Tadawul.
“Once further investments are deployed to secure additional parent stock supply, the parent bird facility will be utilised for hatching egg production as initially planned for poultry capacity expansion,” the company said.
In May 2021, Almarai outlined plans to invest 6.6 billion riyals over five years to expand its poultry business across the kingdom.
The investment would help the company to double its market share in the segment, it said at the time.
Almarai reported an increase in net income of about 9 per cent during the first-quarter as revenue climbed amid easing coronavirus-related restrictions in the kingdom and the Gulf region.
Net profit attributable to the company's shareholders for the three-month period ended March 31 rose to 420.5m riyals, compared with the same period in 2021. First-quarter revenue grew by about 24 per cent a year to 4.5bn riyals.