Almarai higher revenue on first quarter profit increased by 9%
10 April 2022
Almarai, the Middle East’s largest dairy producer, reported a roughly 9% increase in first-quarter net income as revenue increased due to the lifting of Covid-related limitations in Saudi Arabia and the wider Gulf region.
Almarai said in a regulatory statement to the Tadawul stock exchange on Sunday that net profit attributable to the company’s shareholders for the three months ending March 31 increased to 420.5 million Saudi riyals ($122 million) from the same period in 2021.
Almarai higher revenue about 24% year over year to 4.5 billion riyals in the first quarter.
“Positive revenue growth was visible in all areas,” the company claimed, citing improved trading conditions following the Covid-19 movement limitations, the opening of educational facilities, and an increase in the number of visitors to the region.
Saudi Arabia’s economy has resurfaced after the country relaxed pandemic-related restrictions. According to Jadwa Investments, the Arab world’s largest economy would rise 7.7% in 2022, up from 3.2 percent last year.
In February, consumer expenditure increased 10.4% year over year, compared to an average yearly increase of approximately 5% in the fourth quarter of 2021, as residents and visitors alike throng to hotels, restaurants, coffee shops, and entertainment venues.
The number of Covid-19 infections is also declining, owing to the government’s widespread testing and vaccination campaigns.
Almarai’s income increased across the board, with the bakery, fresh dairy, and dairy food sectors leading the way.
Increased sales drove a 6% increase in dairy and juice profit, but this was matched by higher cost inflation caused by feed and dairy commodities. Additional expenses were incurred as a result of the Egyptian pound’s depreciation, but tighter cost controls resulted in positive growth in the segment’s bottom line.
Almarai higher revenue on baked products’ profit increased by 79.2%, owing to stronger sales as schools reopened and the company took advantage of economies of scale in manufacturing, according to Almari.
Profit from poultry products climbed by 9%, owing to a 20% increase in revenue. The food service division helped to drive top-line growth, although profitability was hampered by the ongoing rise in corn and soya prices during the quarter.
Saudi Arabia’s inflation rate for 2022 has been raised up to 2.4 percent from 1.7 percent earlier, owing to a global surge in food costs induced by the Russia-Ukraine conflict.
According to a new analysis released earlier this month by the investment bank, the monarchy, which bought approximately 45 percent of its wheat from Russia and Ukraine last year, Almarai higher revenue has seen a 40% increase in the cost of purchasing wheat so far in 2022.
In February, food and beverage prices in the kingdom increased by 2.4% on a yearly basis, compared to a 2% increase in January
Almarai stated its input costs increased during the reporting period, owing to higher soya and dairy commodity prices, as well as higher transportation expenses.
Selling and distribution costs climbed by 43.4 million riyals, or 7.2 percent, year over year, reflecting increased activity and product pre-loading during Ramadan, when food sales tend to spike.
General and administrative costs increased by 7.5 million riyals, reflecting back-office efforts to support the increased sales.
Almarai stated it experienced a 10 million riyal impairment of financial assets, which was due to an increase in trade debtors.
Finance costs have remained relatively unchanged, since a reduced debt total is offset by a higher interest rate, according to the report.
