Savola aims to cook up bigger gains in Egypt

What's Up: Saudi food giant proves appetite with double purchase.

Saudi Arabia's biggest food company is looking to profit from pasta. Savola Azizia has agreed to buy a 78 per cent stake in two Egyptian food companies for 557 million Egyptian pounds.

The two companies, Al-Malika and Al-Farasha, have the capacity to produce 120,000 tonnes of pasta a year and together account for 30 per cent of the market in Egypt, Savola said. Savola initially announced its plans to enter the pasta market at the end of 2009. The company has expanded its food and retail business to meet rising demand in Saudi Arabia and Egypt. Savola's strategic investments include a supermarket chain, a milk and dairy producer, a fast-food chain, and a host of edible oils and sugar businesses.

Panda, a 74 per cent-owned subsidiary, is the largest grocery retailer in Saudi Arabia, operating 87 supermarkets and 38 hypermarkets in the kingdom. Panda has a history of fast growth, expanding both organically and inorganically. The company aims to capitalise on the fragmented nature of the Saudi grocery market, where the top five players have a combined market share of just 15 per cent.

Savola owns 26.5 per cent of Almarai, the largest dairy and milk producer in the Gulf region. The company also owns a 49 per cent stake in Herfy, Saudi Arabia's second-biggest fast-food chain after McDonald's.

Savola, through subsidiaries Afia Internationaland Savola Foods Emerging Markets, operates 11 edible oils manufacturing facilities in eight countries and serves 30 countries in the Middle East, North Africa and Central Asia.

Al Osra, Savola's sugar segment, caters to countries in the Middle East. Savola's increased sales and market share in the food and retail sectors boosted the company's profitability in the third quarter.

Net income was 8.7 per cent higher at 307.9 million Saudi riyals compared with 283m riyals in same period a year earlier. The company said this week it expected full-year earnings, before capital gains, to reach 1 billion riyals.