Poultry, bakery, and food businesses driving Saudi food giant Almarai’s growth while dairy and juice profits shrunk

According to its latest quarterly financial statements​, its revenue for the first quarter of 2019 amounted to SAR$3,354.1m (US$894.4m), which was a 3.8% yoy growth.

The poultry business saw the largest revenue growth rate at 19.4%, with top line growth supported by the HORECA channel expansion. The business also registered a 67.5% profit growth due to consistent lower mortality and better cost control.

As for its bakery business, there was a profit growth of 23.1% and a revenue growth of 6.1% due to a volume led improved performance.

In contrast, fresh dairy, its largest portfolio, along with the fruit juice segment, remained weak during the start of this year.

Its revenue from the dairy and juice category rose 0.4% while profit dropped 4.3%, “due to adverse market conditions in juice category, and higher Alfalfa cost coupled with discounting and promotions specifically in long life milk.”​

The firm added that the bottom line from this category was further affected by investment in marketing and branding activities.

The company had been facing stiff competition from international brands in the dairy category, which led to a significant step-up in promotions, in particular, for cheese and butter products.

In this quarter, most launches are also centred on dairy, juice and bakery with the Blueberry Greek Yogurt, Mango Yogurts, and Super Juices.

On the other hand, the firm’s gross profit dipped 3.6% yoy to SAR 1,209.6m (US$322.5m) due to higher input costs, especially due to alfalfa and feed costs.

Flat growth rate in GCC ​

Markets wise, growth was greatest in the domestic market and Egypt, whereas the revenue in GCC countries saw a flat rate.

Revenue growth was 4.3% in Saudi Arabia. Other Middle East markets also saw growth, such as 10.7% in Egypt, 5.9% in Jordan, 1.2% in Kuwait, and 0.6% in Oman.

GCC countries, on the other hand, had a contracted revenue growth. For instance, there was a 0.4% contraction in the UAE, its largest export market.

As of last year, it remained the market leader in the GCC fresh milk and juice segment, enjoying a market share of 57% and 17% respectively.

It believes that future revenue growth will be driven by expansion in existing geographies such as Egypt and new markets in the region.