Almarai Company Announces Its Condensed Consolidated Interim Financial Results for The Period Ended in 30th September 2020 (Nine Months)
| Element List | Current Quarter | Similar quarter for previous year | %Change | Previous Quarter | % Change |
|---|---|---|---|---|---|
| Sales/Revenue | 3,863.1 | 3,573.3 | 8.11 | 4,081.8 | -5.357 |
| Gross Profit (Loss) | 1,514.7 | 1,443.8 | 4.91 | 1,535.2 | -1.335 |
| Operational Profit (Loss) | 750.2 | 746.1 | 0.549 | 759.2 | -1.185 |
| Net Profit (Loss) after Zakat and Tax | 621.5 | 581.2 | 6.933 | 643.9 | -3.478 |
| Total Comprehensive Income | 687.8 | 537.7 | 27.915 | 687.8 | - |
| All figures are in (Millions) Saudi Arabia, Riyals | |||||
| Element List | Current Period | Similar period for previous year | %Change |
|---|---|---|---|
| Sales/Revenue | 11,537.4 | 10,647.3 | 8.359 |
| Gross Profit (Loss) | 4,303.1 | 4,073.2 | 5.644 |
| Operational Profit (Loss) | 2,022.2 | 1,974.9 | 2.395 |
| Net Profit (Loss) after Zakat and Tax | 1,648.5 | 1,499.8 | 9.914 |
| Total Comprehensive Income | 1,665.5 | 1,559.4 | 6.803 |
| Total Share Holders Equity (after Deducting Minority Equity) | 15,334.4 | 14,653.3 | 4.648 |
| Profit (Loss) per Share | 1.68 | 1.52 | |
| All figures are in (Millions) Saudi Arabia, Riyals | |||
| Element List | Explanation |
|---|---|
| Increase (Decrease) in Net Profit for Current Quarter Compared to the Same Quarter of the Previous Year is Attributed to | The increase of 6.9% in the Consolidated Profit Attributable to Shareholders of the Company as compared to the corresponding quarter of the last year is due to: |
• Revenues: Notwithstanding the VAT % increase from 5% to 15% on 1st July 2020, top line grew in nearly all categories, led by Foods & Long Life Dairy by recording double digit growth. The only exception was Bakery category due to drop in singe serve range. In terms of sales channel, the growth was mainly driven by Retail channel and higher exports driven via product availability. Food services channel performance bounced back from Q2, 2020 after lifting of Covid19 pandemic restrictions but was flat year on year basis. In terms of geographical growth, it was primarily led by KSA followed by growth in Kuwait and Egypt.
• Gross Profit: Increased by 4.9%, at a lower margin rate due to higher input costs for juice category, alfalfa cost, labor cost and additional costs related to safety measures to manage Covid19 pandemic.
• Selling and Distribution Expenses (S&D): Increased by SAR 47.9 million, or 8.1% due to higher labor costs, higher growth in retail channel & increased distribution cost in line with revenue increase.
• General and Administration Expenses (G&A): increased by SAR 4.4 million, or 5.6% which continues to run at a lower run rate than revenue growth due to cost management initiatives.
• Other Expenses: Increased by SAR 16.2 million, mainly due to higher losses from sale of dairy herd, which are timing in nature.
• Finance Cost: Funding costs are lower by SAR 13.4 million as benefits of lower interest rate and lower debt levels are partially offset by lower capitalization of funding cost on capex program.
• Revenues: The revenue growth of 8.4% was led by Long Life Dairy, Foods and Poultry where all 3 product categories recorded double digit growth year on year. Further, growth was fueled in Retail channel with double digit growth, however, Food services channel, declined due to Covid19 pandemic impact earlier in the year. In terms of geographical growth, it was primarily led by KSA followed by growth in Egypt, Kuwait and Jordan.
• Gross Profit: Increased by 5.6%, at a lower margin rate due to higher input costs for Juice category, alfalfa cost, labor cost and additional costs related to safety measures to manage Covid19 pandemic.
• Selling and Distribution Expenses (S&D): Increased by SAR 144.2 million, 8.3% due to higher labor and related cost in line with revenue and volume growth.
• General and Administration Expenses (G&A): Increased by SAR 14.8 million, 5.4% which continues to run at a lower run rate than revenue growth due to cost management initiatives.
• Other Expenses: Decreased by SAR 10.3 million, mainly due to timing differences from sale of dairy herd.
• Impairment Reversal / (Loss) on Financial Assets: Increased by 34.0 million due to higher expected credit losses for food services channel, post the impact of Covid19 and general increase in debtors.
• Finance Cost: Funding costs are lower by SAR 33.9 million as benefits of lower interest rate and lower debt levels are partially offset by lower capitalization of funding cost on capex program, especially in Egypt after major project capitalization in Q4 2019.
• Revenue by Region: For Third quarter of 2020 as compared to the corresponding quarter of last year, the Revenue growth in Saudi Arabia, in other GCC and Other Countries by 4.8%, 4.5% and 35.3% respectively. For the nine months period ended 30th September 2020 as compared to the corresponding period of last year, the Revenue growth in Saudi Arabia, other GCC and other countries by 7.9%, 2.5% and 24.5% respectively.
• EBITDA: For Third quarter 2020 Earnings before Interest, Taxes and Zakat, Depreciation and Amortization (EBITDA) reached SAR 1,151.4 million, an increase of 2.0% as compared to the corresponding quarter of last year (SAR 1,128.8 million). For the nine months period ended 30th September 2020 Earnings Before Interest, Taxes and Zakat, Depreciation and Amortization (EBITDA) reached SAR 3,176.0 million, an increase of 3.0% as compared to the corresponding period of last year (SAR 3,082.4 million).
• Profit Margins: For Third quarter of 2020, The Gross Profit, Operating Profit and Consolidated Profit Attributable to Shareholders of the Company are representing 39.2%, 19.4 %, and 16.1 % of Revenue as compared to the corresponding quarter of last year of 40.4 %, 20.9 %, and 16.3 %, respectively. For the nine months period ended 30th September 2020, it represents 37.3%, 17.5%, and 14.3% of Revenue as compared to the corresponding period of last year of 38.3%, 18.5%, and 14.1%, respectively.
• A summary of the Statement of Cash Flows for the Nine Months ended 30th September 2020 is as follows:
- The Cash Generated from Operating Activities (OCF) reached SAR 2,934.2 million, a decrease of 4.9%, as compared to last year (SAR 3,083.9 million). This was mainly driven by higher working capital movement due to higher trade receivables from expansion in modern trade and higher inventory to manage the supply chain during the COVID-19 pandemic. The OCF represents 25.4% of Revenue as compared to 29.0% for the last year.
- The Cash used in Investing Activities reached SAR 402.9 million as compared to the same period last year (SAR 1,723.5 million), a decrease of 76.6%. Investing Activities represent 3.5% of revenue as compared to 16.2% for the last year. Investing cashflow reduce significantly as capex program was limited to mainly replacement and existing capex pipeline.
- The free cash flow (FCF) reached SAR 1,946.3 million as compared to the last year (SAR 1,457.9 million), an increase of 33.5%. The FCF represent 16.9% of revenue as compared to 13.7% for the last year. This was driven by expansion in our OCF and commitment to reduced capital expenditure.
General Comments:
The first 9 months of the year have proven quite challenging. Despite partial lifting of restrictions related to COVID-19 pandemic in late Q2, increase of VAT from 5% to 15% on 1st July resulted in additional commercial impediments. However despite these challenges, Almarai model has proven its resilience by growing in all product segments. Whilst volume growth in gulf region remains weaker due to lower tourism and competitive pressures, KSA, Jordan, Egypt and Kuwait demonstrated significant growth. The strong top line growth resulted in profit growth in double digits, despite additional costs incurred to manage COVID-19 impact. In addition, the continual reduction in debt balance continue to provide additional savings via lower funding costs.
Despite this robust performance in first 9 months of 2020, Almarai remains cautious for the balance of the year and year 2021 due to significant economic challenges facing the Industry driven by expected population decline, lower GDP growth due to COVID-19 and labour reforms. Almarai is developing multiple scenarios to manage these impacts and will roll out additional plans during the year to ensure the supply of quality products to its customers, whilst maintaining a healthy return for its shareholders.
The Consolidated Financial statements for the Nine Months ended 30th September 2020 will be available through the following link on Almarai Website, and Almarai IR App.
https://www.almarai.com/en/corporate/investors/annual-report-financial-statement/
Conference call for analysts and investors will be on 6th October 2020 at 4:00 p.m. KSA time.
The presentation accompanying the conference call will be available on Almarai website within the Investors section under Earning Presentations at:
https://www.almarai.com/en/corporate/investors/earning-presentations/
The Capital Market Authority and Saudi Exchange take no responsibility for the contents of this disclosure, make no representations as to its accuracy or completeness, and expressly disclaim any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this disclosure, and the issuer accepts full responsibility for the accuracy of the information contained in it and confirms, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts or information the omission of which would make the disclosure misleading, incomplete or inaccurate.