Saudi Arabian dairy and food producer Almarai Co posted a 4.7-per cent rise in quarterly net profit on Monday but fell short of analysts’ forecasts as higher commodity prices and expansion costs ate into earnings.
Saudi Arabia’s biggest listed food company by market value said third-quarter earnings were SAR450 million ($120 million) for the period ended September 30, compared with SAR429.7 million a year-ago.
Nine analysts forecast average profit of SAR469 million in the quarter, according to a Reuters poll.
Revenue for the quarter rose 27 per cent to SAR2.7 billion from SAR2.1 billion a year-ago, helped by strong performance at its bakery and poultry unit, Almarai said in a bourse statement.
“High material costs resulting from on-going erratic commodity prices, and also persistent increase in overhead costs due to the expansion in new projects” hurt profitability, Almarai said.
Almarai’s board approved a $4.2-billion five-year investment plan in May to boost product innovation and develop its Saudi workforce.
Almarai has been keen to expand outside its core Gulf region. In December, the company acquired Fondomonte S.A, which owns and operates farms in Argentina, to secure feed for its dairy herd and poultry businesses.
The company also raised SAR1 billion through its first Islamic bond in March, which it said was 4.7 times oversubscribed.
Its shares have risen 22 per cent year-to-date on the Saudi bourse. The diary firm is a favourite among fund managers as it adds diversity to portfolios heavy with banking and real estate stocks.