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The Saudi Almarai Company’s quarterly profits fell in the second quarter of 2021, to 482 million riyals, from 643.9 million riyals, in the corresponding period last year, a decrease of 25%.
However, second quarter profits grew by around 25%, compared to first quarter profits, which were 385.9 million riyals.
In the first half of 2021, Almarai made profits of 867.9 million riyals, compared to 1.02 billion riyals, in the corresponding period last year, a decrease of 15.4%.
The company said that the reason for the decline in net income attributable to shareholders of the company for the second quarter of 2021 compared to the same quarter of the previous year, of 25.2%, is mainly due to several reasons, including income.
Income; Almarai faced a challenge this quarter due to the impact of the base year, (Covid-19) related purchases and the change in the value added tax rate. As a result, revenue decreased 1.9% year-on-year primarily in the Food, Poultry & Bakery segment. The impact of the base year was expressed in the mixing circuits where the catering circuit recorded more than 50% of the profits from the opening of hotels and restaurants, but the distribution circuit recorded a double-digit decrease due to a single purchase observed in the second quarter of 2020. This decrease was offset by excellent performances in Egypt, Jordan and in farms abroad.
Gross profit, which decreased by 11.7% at a lower margin rate due to structural adjustments related to reduced subsidies, higher feed costs due to 100% import and due to mixing of negative channels as described above.
Selling and distribution expenses increased by 1.9 million rials, at a rate of 0.3%, in line with the previous year due to tight cost control.
General and administrative expenses decreased by 0.1 million rials at a rate of 0.1%, in line with the previous year due to tight cost control.
Other expenses decreased by 11.3 million rials, mainly due to the decrease in losses related to the sale of the dairy herd, which were in normal times.
Reversal / (losses) of impairment of financial assets: Gains of 5.6 million SAR were recorded, due to better anticipations of credit risks, mainly driven by the rebound in the foodservice circuit.
The cost of financing decreased by 27.0 million riyals, as the benefits of lower interest rates and lower debt levels are partially offset by lower capitalization of the cost of financing the project program. ‘eligible fixed assets.
The comparative quarterly results of the main operating segments, which resulted in a decrease in net income attributable to shareholders of the Company of 25.2% for the current period, are as follows:
• Dairy and juice segment: Higher imported feed costs, lower subsidies and a mix of negative channels resulted in lower profits, despite improved performance of operations in Jordan and Egypt.
• Bakery Sector: Sector profits fell 9.4% due to lower sales of individual packages and continued school closures.
• Poultry sector: The sector’s net profit declined 45.1% due to two main factors, the first being the overlap in subsidy gains recorded last year, which was unique. The second factor is the mix of negative channels that have been driven by increased sales in the restaurant business compared to retail channels.
• Other activities: Losses of (8.7) million riyals were recorded during the current quarter, against losses of (25.2) million riyals in the same period of the previous year, with the stability continuous foreign farms. In addition, the catering operations operated by Almarai Company, Al Awael Food Factory, continue to perform well compared to last year thanks to the improvement in the market.
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