Saudi Arabia’s Almarai, the Middle East’s largest dairy company, reported a 7 per cent rise in second-quarter net profit, boosted by higher sales and lower costs.
Net profit, after zakat and tax for the three-month period ending June 30, climbed to 557.08 million Saudi riyals ($148.45 million), from the same period last year, the company said in a statement on Sunday to the Saudi stock exchange Tadawul, where its shares are traded.
Revenue during the period rose nearly 4 per cent to 4.79 billion riyals from the same period a year earlier.
“Global commodity cost continued to be flat in the current quarter, although commodities remain at higher levels than in earlier times,” Almarai said in the statement.
“Almarai will continue to manage these risks through better hedging activities and optimising stock utilisation,” the company said.
Almarai’s dairy and juice business posted a decline in earnings as a result of the Ramadan period during the previous quarter, along with the devaluation of the Egyptian pound, the company said.
However, net profit from the bakery and poultry segments grew due to higher sales and additional capacity, Almarai added.
The company's net profit in the first six months of 2023 rose 27 per cent to 1.19 billion riyals from the same period a year earlier.
Meanwhile, Almarai's first-half revenue increased by 8 per cent to 9.86 billion riyals.
“The main risks are still the increase in inflation in the cost prices of feed commodities, and production inputs although most of them have come out of the high levels in the past months,” the company said.
The UN food agency’s world price index declined in May to its lowest in two years as a drop in the prices of vegetable oils, cereals and dairy products offset increase in sugar and meat prices.
The Food and Agriculture Organisation’s food price index, which tracks the monthly change in the international prices of a basket of food commodities, averaged 124.3 points in May, down 2.6 per cent from April, the agency said last month.
The index was also 22 per cent below a record peak reached in March 2022 following the start of Russia’s invasion of Ukraine, according to the FAO.
Almarai's strong results come as Saudi Arabia's economy continues to post strong growth, boosted by the non-oil sector.
Business activity in Saudi Arabia’s non-oil private sector economy remained robust in June as output and new business continued to expand, further supporting employment growth in the kingdom in the second quarter.
The reading for the Arab world's largest economy, on the Riyad Bank purchasing managers' index rose to 59.6 in June, from 58.5 in May, well above the neutral 50-point mark that separates growth from contraction.
Output in the kingdom rose at the steepest rate since March 2015, while sales growth was the strongest in about nine years.
