Saudi food company Almarai posts 7% third-quarter profit growth as revenues continue to rise

Saudi Arabian food company Almarai posted a 6.9% growth in net profit for the three months through September 30 as revenues continue to rise.

Net profit attributable to shareholders reached 621.5 million riyals ($165.7 million) compared to 581.2 million riyals for the corresponding quarter in 2019.

The company attributes the rise in profit to higher revenues.

“Notwithstanding the VAT % increase from 5% to 15% on 1st July 2020, top line grew in nearly all categories, led by Foods & Long Life Dairy by recording double digit growth. The only exception was Bakery category due to drop in singe serve range,” said Almarai a bourse filing on Sunday (Oct 4).

The company in July said it anticipated “significant” challenges for the second half of 2020  due to the threefold increase in value-added tax (VAT), additional custom duties and expected general decline in population as expatriates leave the kingdom as the pandemic impacts jobs. The smaller market size is also attributable to the suspension of umrah since the end of February, and the hajj being significantly limited to only 1,000 resident pilgrims.

Almarai’s third-quarter growth was mainly driven by retail and higher exports, it said.

Sales to foodservice bounced back from the second-quarter after the lifting of COVID-9 restrictions, said Almarai, noting, however, that it stayed flat year-on-year.

Growth overall was primarily led by its home market Saudi Arabia, followed by Kuwait and Egypt.

Almarai’s earnings for the third-quarter are lower than for the second-quarter when net profit was 643.9 million riyals. The company said this is due to seasonality of sales.

© SalaamGateway.com 2020 All Rights Reserved