Almarai, the Saudi Arabian food company, yesterday posted an 8.8 per cent rise in net profit for the second quarter to 433.3 million Saudi riyals (Dh424.3m) from the same period last year, underpinned by higher sales in its core product portfolio.
Almarai has cemented itself as the largest dairy company in the GCC, as well as moving into other markets including Egypt, Spain, the US and Argentina. It has also diversified its product line into areas including bakery, poultry and juices.
Quarterly sales rose by 14.4 per cent to 3.3 billion riyals over the same period, the company said yesterday. Sales within the kingdom reached 2.1bn riyals during the period, compared to 862.2m riyals in other GCC countries. Sales reached 308m riyals in other countries.
Almarai said selling and distribution expenses, as well as general and administration costs rose during the quarter as a result of continuous infrastructure expansion across product categories and geographies, as well as rising depreciation costs from past investments.
Almarai said it expected increasing growth in products demand in its core business during the third quarter, which included the high season of the holy month of Ramadan.
Net profit growth for the same period had been affected, the company said, by a rise in labour costs owing to the government campaign against illegal foreign labour. About 1 million foreign workers left Saudi Arabia last year following a government move to stop the employment of workers without required visas. The move, aimed at boosting job openings for Saudi nationals, has pushed up labour costs for many businesses.
Almarai said profits for the third quarter would also be hit by the persistent increase and volatility in some raw material costs, in particular dairy commodities, and higher spending put in place in advance of future sales growth.
tarnold@thenational.ae
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