Almarai, the premier dairy corporation in the Middle East, has reported a robust increase in its fourth-quarter net income. This growth, surpassing 4 percent, was propelled by heightened sales within its poultry and dairy segments.
The company witnessed its net profit soar to 370.72 million Saudi riyals ($98.85 million), following adjustments for zakat and tax for the quarter concluding on December 31, as per a statement to the Saudi stock exchange, Tadawul.
This financial uptick was primarily due to a 5 percent climb in operating profit, which is attributed to an upswing in revenues, stable commodity prices, and efficiently managed operational expenses.
Almarai highlighted that despite escalating funding costs, the fourth-quarter net profit was bolstered by 4 percent mainly through increased operating profit and synergies from the full acquisition of its businesses in Egypt and Jordan earlier that year.
In a significant move, Almarai Investment Holding finalized the purchase of International Dairy and Juice Limited, a past joint venture with PepsiCo in Egypt and Jordan, for 255 million riyals.
The company’s revenue for the fourth quarter edged up by nearly 2 percent year-on-year to 4.92 billion riyals, with a particularly strong showing in its foundational GCC markets, notably Saudi Arabia.
Nevertheless, the company faced headwinds such as diminished commodity sales in North America and a lower contribution from Egypt, where currency devaluation impacted results.
Segment-wise, the dairy and juice division of Almarai reported an uptick in profits for the fourth quarter, driven by higher sales in key Gulf markets and stringent cost management.
Moreover, the bakery segment of the company also experienced a year-on-year profit increase, fueled by escalated bread sales and the popularity of single-serve offerings.
The poultry division benefited from expanded production capacity, leading to a rise in net profit.
Reflecting on the year 2023 as a whole, Almarai’s net profit jumped by over 16 percent to 2.05 billion riyals, while revenue increased approximately 5 percent to 19.58 billion riyals. The company attributes this success to a stable market, vigorous trading, and a focus on cost control, stable commodity costs, expansion of the poultry segment, introduction of new products, and enhanced direct marketing communication with consumers.
Almarai has also expressed intentions to diversify into the seafood and frozen bakery sectors and anticipates that its core business will continue to capture more market share across select product categories and regions.
Looking forward, the company is exploring growth opportunities beyond its existing operations and aims to strategically deploy capital in alignment with its five-year investment plan.