Net income rises to 674.1m riyals in the three months ended June
Saudi dairy company Almarai says Q2 profit up 2.4 per cent on lower costs
Saudi Arabia’s Almarai, the Middle East’s largest dairy producer, said second-quarter profit rose 2.4 per cent thanks to lower commodity prices and greater production efficiency despite tougher market conditions, especially in Egypt where the currency was devalued in November.
Net income attributable to shareholders of the company increased to 674.1 million Saudi riyals (Dh 660.2m) in the three months ending in June from 658.4m riyals in a year earlier, the company said on the website of the Saudi Arabian Tadawul stock exchange.
Revenues in the quarter fell, however, by 4.2 per cent to 3.76bn Saudi riyals compared to 3.93bn riyals a year earlier.
“The tough market conditions since last year have continued in the second quarter of 2017,” the company said. “Devaluation of the Egyptian pound, lower exports and lower consumer sentiment have impacted results for the quarter, particularly in the dairy and juice segment.”
The company launched a productivity improvement and cost-cutting programme at the end of 2016 with the aim of saving 500m riyals in a two-year period. Almarai said it took the measures to combat an increase in competition, higher alfalfa costs and the devaluation of the Egyptian pound.
The Egyptian pound was devalued as part of a reform package at the end of 2016 which resulted in the currency’s value dropping by about 50 per cent, causing inflation to rise. The measure was implemented to secure a US$12bn loan from the IMF. The move has helped to pave the way for capital inflows into the country.
Almarai said its capital reduction programmes that started last year as well as a strict focus on inventory reduction improved cash flow by 1.2bn riyals in the first half of this year compared to last year.
Looking forward, the company said that it remains cautious for the remainder of 2017, given the overall market environment and the expected unfavourable seasonality of the third quarter.