Savola in talks for oilseed crushing investment

Saudi Arabia's Savola Group is in talks with potential Ukranian and Russian partners for a possible investment in oilseeds crushing in Ukraine, the company's chief executive said.

"After what we have announced about sugar beet investment plans (in Egypt), we are thinking of oilseeds crushing, buying the crops from farms ... We are in advanced talks to enter this industry," Sami Baroum said at a business function in Riyadh late on Tuesday.

Savola plans to raise its annual sugar refining capacity in Egypt by more than half in two years partly by building a 200,000-tonne-per-year sugar refinery that will process local sugar beets, it said earlier this month.

Savola is both the world's largest producer of branded edible oil and the Middle East's largest sugar refiner.

"We are in talks with two partners, one Ukrainian and one Russian," he said at the event organised by the Riyadh Chamber of Commerce and Industry.

The company does not expect its edible oil business in Iran to be affected by regional political tensions. "We are business people, we have nothing to do with politics," Baroum said.

Shi'ite Iran and Sunni powerhouse Saudi Arabia traded accusations on Tuesday over tensions in Lebanon.

Savola started business in Iran in 2004 and now holds a 43 per cent share of the edible oil market there. Its operations there generated profit of SAR180 million (Dh176.57 billion) in 2007, representing about 15 per cent of its net profit that year.

"Iran now generates more profit than Saudi Arabia," Baroum said.

Baroum also said he expects the merger of Savola's supermarket chain Panda Al-Azizia with the local Giant Stores to generate combined sales of SAR6 billion in 2008 against SAR3.7 billion in 2007.

When the agreement to merge the two entities was announced in February, Savola said then the combined sales would reach SAR5 billion.

"The retail business' net margin stood at less than 1 per cent in 2007 but we expect to rise to exceed 1 per cent in 2008 on synergies the merger will generate," Baroum said.

The merger will still keep French Carrefour regional leader in the retail industry with sales that reached SAR7.5 billion in 2007, Baroum said.