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Mon 19 Jan 2009 03:36 PM

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Saudi's Almarai posts 13.5% higher Q4 profit

Gulf's largest dairy by market value expands distribution network in Q4.

Saudi Arabia's Almarai Co, the Gulf's largest dairy firm by market value, posted a 13.5 percent rise in fourth-quarter profit on higher sales as it expands its distribution network.Almarai made 219.2 million riyals ($58.45 million) in the three months to Dec. 31 up against the 193 million riyals it made a year-earlier, the firm said in a statement posted on the bourse's website.

"The 2008 performance can be attributed to ... execution across all aspects of the business, particularly the expansion of our distribution network", the firm said.

Earnings per share for 2008 were 8.35 riyals compared to 6.12 riyals for 2007, it said.

Net profit in the fourth-quarter was however 25.4 percent below its level in the third-quarter of 2008 in what the company attributed to "shifts in the seasonality of consumer consumption".

"This sequential decline in earnings was expected due to the fact that Ramadan - a strong period of sales for Almarai's business - fell in 2008 fully in the third quarter while it was spread between the third and fourth quarters in 2007," said Laurent Gally, analyst at Dubai-based Shuaa Capital.

Analysts forecast of Almarai's fourth quarter earnings ranged from 215.1 million riyals to 224 million riyals, according to a Reuters survey last month.

The stock fell by as much as 2.2 percent despite the announcement of a 3.5 riyals dividend for 2008 against 2.5 riyals for 2007.

"We believe the current 2.6 percent dividend yield it represents is, in itself, unlikely to represent a catalyst for the share price," Gally said.

Almarai fourth-quarter turnover rose 22 percent from a year earlier. "We believe Almarai fresh dairy products are still gaining market share across the Gulf Cooperation Council," Gally said.

For the 12 months to Dec. 31, Almarai's net profit rose 36.4 percent to 910.3 million riyals.

Almarai has been diversifying its revenue sources through acquisitions and said it plans to spend 6 billion riyals in the five years to 2013.

The firm announced in the third quarter two acquisitions of juice and dairy manufacturers in Egypt and Jordan.

Last year, Almarai began consolidating the earnings of the acquisition of Western Bakeries and International Bakery Services Co in 2006. It paid 709 million riyals in stock for the companies.

The dairy firm is a shareholder in Zain Saudi Arabia, a consortium that paid $6.1 billion in 2007 for a licence to start Saudi Arabia's third mobile telephone network. (Reuters)

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