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Saudi dairy firm approves multibillion dollar five year investment plan.

The board of Saudi Arabia's Almarai approved a five-year capital investment programme back at the end

of May 2015 that will sink 21 billion Saudi Riyals (US$ 5.6 billion) into the business, over a period

running from 2016 to 2020.

What is the Arabian Gulf's largest dairy products firm, confirmed at the time that the new programme

will replace its existing investment plan, which was scheduled to infuse some 15.7 billion Saudi

Riyals (US$ 4.2 billion) into the Almarai operation between 2013 up to 2017. The latest round of

investment will address expansion within a variety of segments, including: farming, manufacturing,

distribution and logistics.

"The objectives set by the board include increasing further its presence in all segments and

geographies where it operates, with a target to double consolidated sales, while improving the

financial performance," the firm said in a statement on the subject. Also factored into the plan are

investments directed toward an overall product line refresh and innovation process, the release


Almarai has a footprint in all six Arabian Gulf Cooperation Council (GCC) countries:

Bahrain, Kuwait, Qatar, Oman, Kingdom of Saudi Arabia and the United Arab Emirates (UAE), as well as

Egypt and Jordan. It also owns Fondomonte, an Argentinian agricultural company which supplies cattle

feed to the Al Marai dairy herd.

The company has posted steady sequence of double-digit percentage rises in quarterly profit as the

year has progressed, generally between 11 and 13 per cent with a spike in Q2 of over 22 per

cent. Analysts forecast annual profit growth of around 14 per cent and final posted net income for

the year of between 1.85 and 1.98 billion Saudi Riyals (US$ 493.1 and 519.7million).

Saudi Arabia's food companies are attracting significant interest from investors, who see the

industry as a bona fide channel into growing grass roots wealth both in the kingdom and the region.

In terms of share price, the opening of the kingdom's equity market to direct foreign investment in

June and Almarai's inclusion in a discrete MCSI Saudi share index has benefited the company up to a

point, but the influence of global markets is likely to weigh down performance. Plummeting oil

prices, slowing economic growth in China, interest rates in the US are all having a significant

impact on the world's stock markets.

According to the statement, Almarai's plan will be financed from a number of sources, including:

internal operating cash-flow, bank facilities, finance from the Saudi Industrial Development Fund

(SIDF) and the Agricultural Development Fund (ADF), along with the company's existing sukuk

(Islamic bond) programme.

Copyright [c] Andy McTiernan. All rights reserved. Provided by SyndiGate Media Inc. ( ).

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Publication:Andy McTiernan Property & Economy Bulletin
Date:Aug 5, 2015
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