(Reuters) – The board of Saudi Arabia’s Almarai has approved a capital investment plan which will reach 21 billion riyals ($5.6 billion) in the next five years, it said on Tuesday.
The Gulf’s largest dairy firm said the 2016-2020 programme will replace their existing investment plan — which foresaw spending worth 15.7 billion riyals between 2013 and 2017 — and would cover expansion in the areas of farming, manufacturing, distribution and logistics.
“The objectives set by the board include increasing further its presence in all segments and geographies where it operates, targeting to double consolidated sales, while improving the financial performance,” it said in a statement.
Almarai is present in the six Gulf countries as well as Egypt and Jordan. It also owns Fondomonte, an Argentinian farming firm which supplies feed to its dairy herd.
The company posted a 12 percent rise in first quarter net profit to 306.5 million riyals ($81.7 million) in the three months to March 31, aided by a 11.7 percent year-on-year increase in first-quarter sales, which rose to 3.04 billion riyals.
Food companies in the kingdom are drawing significant interest from investors, who see the sector as a way to tap into the growing wealth in the region.
The firm is expected to benefit from the opening of the kingdom’s equity market to direct foreign investment on June 15 and has been included by index compiler MSCI in its standalone Saudi index set to be launched on June 1.
Almarai will use its growing operating cash-flow besides bank facilities, money from the Saudi Industrial Development Fund (SIDF) and the Agricultural Development Fund (ADF), or its existing sukuk program to finance its investment plan, it said.
Investments required for product renovation and innovation have also been factored in the plan, it added.
($1 = 3.7500 riyals) (Reporting by Archana Narayanan; Editing by David French)