Saudi-based dairy conglomerate Almarai has sold its 33% stake in United Farmers Holding Company (UFHC) to Saudi Agricultural and Livestock Investment Company (SALIC), it announced on Tuesday.
Almarai sold its shares for a total of $28 million following the completion of all regulatory and legal approvals. SALIC is one of the founding partners of UFHC, a joint venture equally owned by the investment firm and two private sector companies in Saudi Arabia.
The sale’s financial impact will be effective in the fourth quarter of 2018 results, with the proceeds to be used in support of the firm’s business and investments.
Almarai, which is listed on the Tadawul stock exchange, struggled to maintain profitability in 2018 due to a number of factors including slowdown in the GCC consumer goods market as well as the implementation of 5% value added tax. The changes among others resulted in higher energy and transportation costs.
The firm’s second quarter in 2018 saw a 2% year-on-year drop in net profit, while its third quarter witnessed a 4.9% decrease to $169m compared to the same period in 2017. Sales for Q3 remained largely flat at $898m.
The drop was attributed to higher costs of sales and exports, as well as a general market slowdown.
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