Middle East's biggest dairy producer reports 10.5% jump in second-quarter profit as revenue climbs
Almarai's revenue growth was 'spearheaded by foods, long-life dairy and poultry' segments
Saudi Arabia’s Almarai, the Middle East's biggest dairy producer, reported a 10.5 per cent year-on-year jump in second-quarter net income as revenue rose.
Net profit attributable to the company’s shareholders for the period ending June 30 climbed to 643.9 million Saudi riyals (Dh630.6m), the company said on Sunday in a statement to Saudi Arabia's Tadawul stock exchange, where its shares trade.
Almarai’s total comprehensive income for the period jumped almost 12 per cent to 687.8m riyals. Revenue for the second quarter climbed 8.3 per cent year-on-year to 4.08 billion riyals, it said.
“The revenue growth was spearheaded by foods, long-life dairy and poultry where all three product categories recorded double-digit growth year-on-year,” Almarai said. “Positive revenue growth was evident in all categories except juice due to general decline in [the] juice market and introduction of [a] sugar tax in late 2019.”
Selling and distribution expenses for the second quarter rose 8 per cent to 47m riyals due to a rise in labour costs. General and administration expenses also grew 5.3 per cent for the reporting period to 5.3m riyals, while other expenses decreased by 9m riyals, mainly due to lower losses from the sale of dairy herd, the company said.
Almarai's net profit for the six-month period also climbed almost 12 per cent to 1.03bn riyals, helped by an 8.5 per cent jump in revenue to 7.67bn riyals.
The dairy producer, which largely remained unaffected by strict movement restrictions enforced in the kingdom to stem the Covid-19 outbreak, said it is preparing for the impact of increased VAT on its business.
On May 11 Saudi Arabia announced a reduction in expenditures, suspended the cost of living allowance and plans to triple VAT in a bid to offset the impact of the coronavirus pandemic on its economy and buttress its finances amid lower oil prices.
“Despite this resounding performance in first half [of] 2020, the next half represents significant challenges for Almarai due to [the] introduction of [higher] VAT, additional custom duties and [an] expected general decline in population,” Almarai said in the bourse filing.
“Almarai is developing multiple scenarios to manage these impacts and will roll out additional plans during the year to ensure the supply of quality products to its customers, whilst maintaining a healthy return for its shareholders.”
The consumer goods company, which experienced a decline in profitability last year, has reshuffled its top management. Almarai appointed Majed Nofal as chief executive in December, who took over the company from veteran Georges Schorderet at the beginning of this year.
In April, the company appointed Danko Maras as its new chief financial officer as Paul Louis Gay went into retirement.
Updated: July 5, 2020 01:39 PM