Almarai first-quarter net income jumps 14 per cent on higher revenue

The company said it currently does not expect the spread of Covid-19 to affect its business

Almarai reported a 14 per cent increase in its first-quarter net income as revenue climbed. Satish Kumar / The National

Saudi Arabia's Almarai on Monday reported a 14 per cent year-on-year jump in its first-quarter net profit as revenue climbed and said it currently does not expect the coronavirus pandemic to have a "material impact" on its business.

Net profit attributable to the company’s shareholders for the period ending March 3 climbed to 383 million Saudi riyals (Dh375m), the company said on Monday in a statement to Saudi Arabia's Tadawul stock exchange, where its shares trade.

Almarai’s total comprehensive income for the period, however, dropped more than 22 per cent to 289.8m riyals, it said.

Almarai's net profit came in line with analysts' estimate at EFG Hermes, “mainly driven by strong top-line growth”, the Egyptian investment bank said in a note to investors.

Revenue for the reporting period climbed 8.6 per cent year-on-year to 3.59 billion riyals. It grew 7.9, 6.5 and 19 per cent in Saudi Arabia, the rest of the GCC and other markets, respectively.

“The revenue growth was spearheaded by foods, long-life dairy and poultry where all three product categories recorded double-digit growth,” the company said in the bourse filing.

“All trading countries reported positive growth except Oman where heavy dairy competition resulted in lower sales on a year-on-year basis.”

Selling and distribution expenses for the reporting period climbed to 47m riyals, an 8.3 per cent rise owing to higher labour costs, higher promotions and trade support expenses to support sales development activities.

General and administration expenses also grew by 5.4 per cent, the company said.

Almarai said its business operations currently remain "largely unaffected" as the food industry in general is exempt from movement restrictions put in place to curtail the spread of the pandemic.

It is also exempt from curfew hours and cargo shipping and flight operation restrictions that are in place in some of the markets in which it operates.

“Based on these factors, Almarai’s management believes that the Covid-19 pandemic has had no material effects on Almarai’s reported financial results for the period ended March 31,” it said.

“Almarai’s management continues to monitor the situation closely.”

The consumer goods company had experienced a continued decline in income in recent quarters as contributions to overall profits from various business lines decreased, and it had to reshuffle its top management last year.

Almarai appointed Majed Nofal as chief executive in December. He took over from company veteran Georges Schorderet at the beginning of this year.

Mr Schorderet, the company’s former chief executive and chief financial officer, was called back from retirement to assume charge from Alois Hofbauer, who only took up his role in April last year but resigned owing to personal reasons.

The company on Monday announced the appointment of Danko Maras as its new chief financial officer. Mr Maras has replaced Paul Louis Gay, who is retiring.

The company also said that shareholders approved the board's recommendation to pay a dividend of 0.85 riyals per share, or about 850m riyals in total, at an extraordinary general meeting held on Monday "using modern technology".