Saudi-based dairy group Almarai has agreed to sell its 33% stake in United Farmers Holding Company (UFHC) to Saudi Agricultural and Livestock Investment Company (SALIC), for SAR 105 million ($28 million).
SALIC is one of the founding partners of UFHC, a joint venture which is equally owned by SALIC and two other Saudi-based private sector companies.
Almarai said in a statement given to the Tadawul stock exchange, where its shares are listed, that the financial impact of the sale will take effect as of the fourth-quarter of 2018.
The company, which is one of the largest dairy companies based in the Arabian Gulf, also claimed that the proceeds from the transaction will be used to support the company’s business and investments.
Almarai struggled to maintain its profitability over the last year, as its third-quarter net profit fell 4.9% to SAR 634.5 million ($169 million) compared to the same period in 2017, while overall revenue in the quarter remained largely flat at SAR 3.37 billion ($898 million).
The company attributed this to the higher cost of sales and exports and a general contraction of the market, driven by factors such as a slowdown in the GCC consumer goods market, the implementation of an expatriate levy in Saudi Arabia and 5% VAT in the country, as well as a range of other factors which have led to higher energy and transportation costs.
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