Investment plans follow Tanmiah Food’s IPO

Saudi Arabia-based Tanmiah Food Company has announced it will make a number of investments to support an expansion in poultry production. Coming shortly after an oversubscribed Initial Public Offering (IPO), the company’s plans fit well with national policy to raise self-sufficiency in poultry meat production.

iqoncept, Bigstock.com
iqoncept, Bigstock.com

Saudi Arabia-based Tanmiah Food Company announced it will make a number of investments to support an expansion in poultry production. Coming shortly after an oversubscribed Initial Public Offering (IPO), the company’s plans fit well with national policy to raise self-sufficiency in poultry meat production.

An ability to capture new and emerging growth potential in the region is given as the reason behind the latest investments announced by Tanmiah Food Company.

According to Arab News, the firm is set to invest over the coming five years to expand its capacity in feed production, as well as primary and further processing.

These investments respond to recent developments in the market in Saudi Arabia. Since 2014, the Kingdom has seen population growth of 2.4%, as well as increased consumer spending, the source reports.

News of the latest investments in local assets and operations by the company will likely be welcomed by the nation’s authorities. Earlier this year, a policy of encouraging greater self-sufficiency was announced as part of the Saudi Arabia 2030 Vision. For chicken meat, the national target is 80%. 

Saudi poultry production: raising self-sufficiency

In May of this year, authorities in Saudi Arabia announced a near-immediate ban on imports of poultry meat from 11 Brazilian processing plants. While no explanation was given for the move, a previously announced policy by the Kingdom for greater self-sufficiency may be the explanation.

Within weeks, the Saudi Food and Drug Authority (SFDA) added France and Ukraine to the list of suspended poultry exporters, according to the USDA Foreign Agricultural Service (FAS). It reported that different reasons were given to each country. For France — which exported around 73,000mt poultry meat in Saudi Arabia in 2020 — highly pathogenic avian influenza (HPAI) was given as the reason for halting imports from some areas in the southwest of the country. 

Exporting more than 84,200 mt to the Kingdom last year was Ukraine. Its leading exporter, MHP, also had product from one of its facilities banned by Saudi Arabia. 

In effect, these measures alone drastically cut the country’s inbound trade in poultry meat. They were likely to succeed in their aim of causing uncertainty among importers, reports FAS. 

Rising domestic chicken output

According to FAS, it is unclear how the gap between domestic supply and demand would be filled in the short term, given that Saudi Arabia had been so heavily reliant on poultry meat imports. 

In 2020, the Kingdom imported almost 652,300 metric tons (mt) of chicken meat and products. Of this total, Brazil supplied 72%, FAS reported. 

For 2019, domestic chicken meat production was 800,000 mt, according to the statistics arm of the United Nations’ Food and Agriculture Organization, FAOstat. Unofficial figures on this database show national output increasing steadily from 550,000mt in 2015. 

Tanmiah's recent IPO heavily oversubscribed

In the first week of August, Tanmiah Food Company listed on the Saudi Exchange. According to Saudi Gazette, the sale of 30% of the company’s share capital raised SAR402 million riyal (SAR; US$107 million). 

“The exceptionally high demand for our shares shown by both institutional and retail investors is a clear vote of confidence in Tanmiah’s strength in the marketplace, our integrated and efficient business model, the resilience of the markets in which we operate, and our plans for the future,” said company spokesman Ahmed Osilan.

According to the same source, the group’s output was 81.5 million chickens in 2020 — an increase of 23% over three years. This expansion makes Tanmiah Food the second largest producer of fresh chicken for Saudi Arabia’s retail market. 

An integrated poultry producer, the company operates 84 farms, six hatcheries, two slaughterhouses, three food processing plants, and 13 storage facilities. 

For the first half of 2021, the group’s gross profit was 22% higher year-on-year at SAR167.5 million. However, at SAR22.2 million, there was a 16% fall in net income for the period. This was attributed to rising world grain prices, reported Arabian Business last week.

More on Tanmiah Food Company

Tanmiah Food Group is among the leading Middle East producers in WATTPoultry.com’s Top Poultry Companies database.

Formerly Supreme Foods Group, Tanmiah Food is the agricultural holding company for Al-Dabbagh Group, and a parent company for the Agricultural Development Company, which produces and distributes broiler meat under the brand name Tanmiah. Within Saudi Arabia, the group’s Desert Hills for Veterinary Services Company Ltd. produces and distributes animal feed, day-old broiler chicks, and hatching broiler eggs, as well as animal health products, livestock equipment, and technology. Tanmiah is also the parent company for Supreme Foods Processing Company, which supplies fresh and further processed chicken in addition to beef. Supreme is a major supplier for several fast-food restaurant chains and hotels, with a distribution network across the Middle East.

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