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Saudi Almarai Q4 profits inch up, raw material costs bite
Almarai margins affected by higher raw material costs; Dairy firm says has yet to book Zain Saudi impairment
January 17, 2012 2:46 by Reuters
Saudi Arabia’s Almarai Co, the Gulf’s biggest dairy firm by market value, reported a small rise in fourth quarter profits on Tuesday, citing the negative impact of higher raw material costs.
The dairy giant had net profit of 285.5 million riyals ($76 million) in the three months ended Dec. 31, up 0.6 percent from 283.8 million riyals in the prior-year period, it said in a statement. Profits were down 33.5 percent over the third quarter.
Fourth quarter sales rose 16.1 percent to 2.1 billion riyals from 1.8 billion riyals a year earlier. On the year, sales stood at 7.95 billion riyals, up 14.7 percent over 2010.
Almarai also said it did not book impairments on its investment in telco Zain Saudi during the quarter. The diary firm was one of nine founding shareholders in Zain Saudi and owns a 2.5-percent stake initially valued at 350 million riyals.
“The fair value of the Zain equity investment has been significantly below cost … Management is assessing the quantum of impairment and will recognize the impairment loss in its annual consolidated financial statements for the year ended 31 December, 2011,” Almarai said.
The Saudi firm’s chief financial officer told Reuters in October that it will likely take a $36 million impairment on the stake.
Last year, Almarai said it plans to invest 4 billion riyals to increase its capital by 73.9 percent to 4 billion riyals and that it plans to spend 4 billion riyals in the poultry sector. ,
It also said it plans to issue a 2.25 riyal dividend per share for 2011.
In December Almarai said acquired Fondomonte S.A, which owns and operates farms in Argentina, to secure feed for its dairy herd and poultry business. (Reporting by Asma Alsharif; Editing by Amran Abocar)