Business & Money | Tuesday 19 July, 2016 1:02 pm |

Almarai showed a strong Q2 2016 performance with sales up + 10.3% and net Income up by +18.5% compared to the same quarter of 2015.   The Q2 2016 results reached record levels in the company’s history for Net Income of SAR 629 million and Sales of SAR 4,025 million.  

 

• Q2 2016 was favorably impacted by the timing of the Holy month of Ramadan this year, sales of most its product categories, but in particular fresh dairy and long life dairy  achieved a strong performance, the bakery segment enjoyed also a strong growth this quarter thanks to the full availability of production, 
• All product categories benefited from the favorable product mix effects, the persistent low cost of commodities and also the first effects of the operational efficiency programs initiated earlier in Q1 2016 to offset the increase in fuel and electricity,   
• Poultry losses this quarter reduced from Q1 2016 despite a strong competition mainly from imported frozen products which affected both its top and bottom-line negatively,
• The Operating Income quarter-to-quarter showed a strong increase of +16.1% with an EBIT ratio reaching 18.4%
• Finance costs increased this quarter both because of the increase in debt due to high seasonal working capital requirements but also because of the increase in the interest rate in SAR,
• The Net Income increase for the quarter stood at + 18.5% compared to last year.

 

At the end of June 2016 sales grew by + 11.8% to 7.5 billion and Net Income by + 12.0% to SAR 937 million mainly because of the strong Q2 performance. Cash-Flow generation for the first 6 months was negative by – SAR 1.0 Billion due to the increase in working capital in Q2 and also the sustained high level of investment which reached SAR 2.3 Billion year-to-date in line with our long term investment plan. 

 

For the remaining part of 2016, the company remains cautious given the expected unfavorable seasonality in Q3 and the overall market environment.