Almarai, the Arabian Gulf’s largest dairy company, said it completed the sale of its shares in United Farmers Holding Company to Saudi Agricultural and Livestock Investment Company (Salic) for 105 million Saudi riyals (Dh103m).
Salic is one of the founding partners of United Farmers Holding Company, which is a joint venture equally owned by Salic and two private sector companies in Saudi Arabia.
Almarai’s stake in United Farmers represented 33 per cent of paid up capital. The sale completed after the parties obtained the necessary regulatory and legal approvals, Almarai said in a statement to the Tadawul stock exchange, where its shares are listed, on Tuesday.
The financial impact of the transaction takes effect as of the fourth quarter of 2018, and is not material the company’s financial statements, it added. The proceeds from the transaction will be used to support Almarai’s business and investments.
Almarai has struggled to maintain profitability in 2018 as it grappled with headwinds including a general slowdown in the GCC consumer goods market, the implementation of a 5 per cent VAT, an expatriate levy in Saudi Arabia and other structural economic changes, which have driven higher costs in energy and transportation and altered demographics.
_______________
Read more:
Exclusive: Almarai expects to issue a new sukuk by year-end, CFO says
Saudi Arabia’s Almarai reports 2% profit drop amid declining exports
Milk price increases unlikely to impact Almarai stock valuation
_______________
The company’s third-quarter 2018 net profit dropped by 4.9 per cent to 634.5m riyals compared to the year-earlier period, and sales for the period for broadly flat at 3.37 billion riyals. Almarai attributed the drop to higher cost of sales and exports and a general contraction of the market. In the second quarter, it reported a 2 per cent year-on-year drop in net profit.
Almarai chief financial officer Paul Gay told The National in October the company expected to issue a new sukuk by the end of 2018 as part of an ongoing debt refinancing strategy.
The company paid back its previous capital sukuk of 1.7bn riyals last September, and has around 12bn riyals of debt on its balance sheet. The new sukuk would be used to “refinance existing debt”, Mr Gay said at the time.