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26 February 2024

Almarai's profit growth slows

By Reuters

Almarai Company, the largest food producer in Saudi Arabia by market value, reported its slowest growth in quarterly profit since 2005 after the Holy Month of Ramadan helped boost third-quarter sales.

Net income rose 14 percent to SAR219.2 million ($58.5m) from SAR193.1m in the year-earlier period, the Riyadh-based company said in a statement to the Saudi stock exchange. Almarai reported a 58 per cent increase in third-quarter profit.

"This sequential decline in earnings was expected due to the fact that Ramadan, a strong period of sales for Almarai's business, fell in 2008 fully in the third-quarter, while it was spread between the third and fourth quarter in 2007," Laurent Gally, an analyst at Dubai-based Shuaa Capital PSC, wrote in a note.

Food and beverage sales and prices increase during Ramadan as demand for the products rises in the kingdom. Inflationary pressures in the kingdom were going to be exacerbated by Ramadan, the Saudi Arabian Monetary Agency said in a uarterly inflation report.

Almarai's nine-month sales rose 41 per cent to SAR3.8 billion, according to a company statement in October.

Almarai's expansion in the Kingdom and the Middle East helped boost full-year net income 36 per cent to SAR910.3m, from SAR667.3m in the year-earlier period as the company expanded its distribution network and benefited from higher juice and dairy prices. Almarai announced in November plans to buy Hail Agriculture Development Co.