Almarai improves poultry performance, profit

Renewed focus on improving poultry performance helped mitigate the economic challenges faced by the Almarai Company of Saudi Arabia in the past year.

Phongphan | Bigstock.com
Phongphan | Bigstock.com

Renewed focus on improving poultry performance helped mitigate the economic challenges faced by the Almarai Co. of Saudi Arabia in the past year.

Economic conditions in Saudi Arabia made last year a challenging one for the Almarai Co., according to its annual report for 2018. Total sales slipped from almost SAR14 billion (US$3.73 billion) in 2017 to SAR13.723 billion last year, and net profit was down from SAR2.182 billion to just under SAR2.01 billion.

Among the changes making business more challenging in the Middle Eastern country in 2018 were the introduction of value added tax (VAT) in Saudi Arabia and other Gulf Cooperation Council (GCC) countries, and increased costs for expatriate workers and for energy, the firm reports. With many foreign workers leaving the Kingdom’s labor market, consumer spending in Saudi Arabia generally was depressed.

Nevertheless, Almarai was confident of making improvements in 2019, which have been borne out in the company’s first quarter results for this year. Revenue for the three months ending March 31, 2019, was more than SAR3.354 billion, an increase of 3.8% year-on-year, which was led by the firm’s poultry business, and by good performance in Saudi Arabia and Egypt, and export trade.

Gross profit made by Almarai during the first quarter of the fiscal year was 3.6% lower than the same period of 2017, which was attributed to higher costs of inputs such as alfalfa and feed, while the dairy and fruit juice markets were flat, particularly in other GCC countries.

Compared with the previous year, Almarai’s poultry business achieved an increase of 67 percent in profit for the quarter, driven by revenue growth of 19 percent. The firm attributed this partly to developments in the food service industry, and also to progress it has made on reducing mortality in its poultry flocks and on controlling costs.

In the past, there had been difficulties in establishing the firm’s Alyoum chicken brand in the market because of inconsistent supplies linked to periods of high mortality among the birds. These losses also led to elevated production costs. The firm says it has begun incorporating a series of successful actions into its strategy to address these challenges, including the installation of air filtration systems into its broiler houses, and enhanced nutrition, husbandry and vaccination programs.

In April, Almarai held its annual management meeting, giving executives the opportunity to thank retiring CEO Georges Schorderet, for his 15 years of service to the company, and to meet his successor, Alois Hoffapauir.

Based in Riyadh, Almarai Co. is among the largest poultry producers in the Middle East, according to the WATTAgNet Top Poultry Companies database.

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