Saudi Arabia’s Almarai, the largest dairy company in the Middle East, reported a 4% net profit increase in the last quarter of 2023, according to a filing to the Saudi stock exchange Tadawul.
The food and beverage business said its net profits for the three months ending in December 2023 rose to SR370.72 million ($98.85 million), driven by a positive performance in its poultry and dairy segments, particularly in Saudi Arabia.
The company also reported a yearly net profit of SR2.05 billion in 2023 ($546.58 million), amounting to a 16% increase. Meanwhile, Almarai’s revenues recorded a 5% year-on-year rise, reaching SR19.58 billion ($5.2 million).
Net profit growth
The firm attributed the net profit growth to“higher operating profit” and its recent acquisitions in the region.
In 2023, Almarai completed the acquisition of International Dairy and Juice Limited, its former joint venture with PepsiCo in Egypt and Jordan, in a deal worth SR255 million ($68 million).
Saudi Arabia was the country that contributed the most to an 8% increase in Almarai’s quarterly revenue growth. However, the net revenue growth at the group level was reduced to 5% due to the devaluation of the Egyptian pound and lower sales of alfalfa from the US operations.
The company’s profits also dropped 24% quarter-on-quarter, explained as a result of “seasonal adjustments in consumption patterns”.
Business divisions
In terms of business divisions, Almarai’s dairy and juice business posted an increase in earnings in Q4, which was attributed to improved sales in the Gulf countries, and strict cost controls.
Meanwhile, Almarai’s bakery segment saw higher net profit driven by both volume and sales growth and the poultry segment reported a profit increase due to sales growth aided by additional production capacity and improved operational efficiency.
Over 2023, Almarai significantly expanded in the poultry category with the launch of several new products and invested in increased direct marketing communication with consumers.
The company has also publicly discussed its plans to enter the seafood and frozen bakery business and said it expects its core business to continue to gain market share in selected product categories and geographies.