‘Tight controls’: Poultry category and cost management power Almarai through to profitability

31-Oct-2023 - Last updated on 31-Oct-2023 at 02:27 GMT

Almarai has posted significant growth and profits in the first nine months of 2023 driven by stringent cost management and gains in the poultry category. ©Almarai

Related tags Almarai financial results Poultry

Saudi Arabian F&B heavyweight Almarai has posted significant growth and profits in the first nine months of 2023 driven by stringent cost management and gains in the poultry category to offset Egyptian currency challenges.

Almarai is best known as one of the largest dairy and juice firms in the Middle Eastern region, covering not only Almarai dairy and juice but also the Farm’s Select juice, 7 Days bakery, Alyoum poultry brands and more.

The firm has a significant presence all over the region including in Egypt, which makes up 8% to 9% of its overall sales, and hence seen negative impacts since the Egyptian Pound became embroiled in a still-ongoing currency crisis.

Nevertheless, Almarai has managed to achieve growth and profitability in the first nine months of 2023, reporting a 6% growth year-on-year in revenue to SAR14.7bn (US$3.92bn) and 20% rise year-on-year in net profits to SAR1.7bn (US$453.2mn).

“Almarai has seen consistent revenue growth across our core GCC markets in each of the quarters in 2023 driven by our poultry, dairy and bakery categories, but this has been partially offset by the significant devaluation of the Egyptian pound,” Almarai Chief Financial Officer Danko Maras said via a formal statement.

“We have also implemented disciplined cost controls, tight controls on overheads, commodity costs stabilisation and focused sharply on operational excellence [which resulted in] market share gains and net profit growth.

“Category profits increased across all of our main categories, but particularly in poultry due to higher revenue growth made possible after the establishment of additional capacity availability in early 2023.”

Almarai saw a 12.9% growth in poultry sales year-on-year or SAR100.2mn (US$26.7mn) increase from SAR775.8mn (US$206.8mn) to SAR876mn (US$23.5mn), which was attributed to this capacity expansion.

The firm’s poultry brand Alyoum manufactures a variety of chicken products from marinated whole chickens in various sauces to ready-to-cook chicken shawarma.

Branching out

Looking forward Almarai is branching out into more categories such as seafood which it first rolled out in Q3FY2023 as well as frozen bakery products to expand beyond its current ready-to-eat baked goods.

“Product portfolio expansion and continual focus on operational efficiency will assist the firm to overcome existing structural challenges such as the devaluation of the Egyptian Pound,” Almarai added.

“The Board of Directors also approved an investment in early October 2023 to further increase our fresh bakery capacity to develop new products, as well as to enter the frozen bakery segment both in Saudi Arabia and other markets.

“This investment plan of SAR405mn (US$108mn) will enable Almarai to offer an expanded range of both fresh and frozen bakery products to both consumers [both via retail] and foodservice channels.

“The expected time frame to complete this investment is over a course of two years.”