Sector News

Saudi’s Almarai to invest $2.8 billion over next five years

June 7, 2018
Food & Drink

Saudi Arabia-based Almarai, which is one of the Gulf’s largest dairy producers, is planning to invest up to SAR 10.6 billion ($2.8 billion) between 2019 and 2023 in a business plan that is aimed at cutting costs and expanding its facilities.

Through this investment Almarai aims to improve its production capabilities within its farms and manufacturing facilities, its distribution and transportation facilities and to expand its geographical footprint.

“Given the persistent challenging economic conditions across the region, the focus on efficiency and cost optimization measures will continue throughout the plan period to ensure continuous competitive advantage,” the company said in a statement.

The diary company said that its expansion will be funded through a mix of existing cash flow and debt.

Almarai’s investment comes as the consumer spending in Saudi Arabia has softened, thanks to the introduction of value added tax this year.

The company’s fourth quarter net profit fell by 4.3% due to falling sales in the GCC markets. Almarai, whose third quarter net profit was also flat, had embarked on a cost cutting program at the end of 2016 to reduce expenses by SAR 500 million over two years. The company has also forecast a weak sales outlook in the coming years as the industry grapples with declining margins and falling sales.

Lat year, Saudi Arabia’s Public Investment Fund became the third largest shareholder in Almarai after it acquired a 16.3% stake in the firm. Almarai, which is listed at the 24th position in Forbes Middle East’s Top Companies In the Arab World, is owned by Sultan Bin Saud Al Kabeer.

By Mary Sophia

Source: Forbes

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