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Mon 18 Jan 2010 11:03 AM

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Saudi's Savola Group posts Q4 profit boost

Firm reports better than expected results, says it will raise net operating income by 8.1% this year.

Saudi's Savola Group posts Q4 profit boost
SAUDI RIYAL: Savola made a net profit of SR269 million ($71.7m) in the three months to end-December. (Getty Images)

Saudi conglomerate Savola Group posted on Monday a better-than-expected net profit for the fourth-quarter and said it would raise its net operating income by 8.1 percent in 2010.Savola made a net profit of SR269 million ($71.7 million) in the three months to end-December compared to a loss of SR464 million it made a year-earlier, the firm said in a statement posted on the bourse's website.

This was above average analyst forecasts which ranged between SR195 million and SR360.9 million, according to a Reuters survey earlier this month.

In addition to being the Middle East's largest sugar refiner and the world's leading manufacturer of branded cooking oil, Savola is active in retail and the plastics industry and holds a 26.5 percent stake in Saudi-based Almarai, one of the Gulf's largest dairy firms.

For the whole of 2009, the company made a net profit of SR952 million, or SR1.9 per share, up from SR202 million in 2008 or SR0.4 per share.

The profit figure for 2009 included capital gains worth SR101 million which followed Alamari's acquisition last year of Hadco, Savola said.

Savola said it expects its net operating income to rise in 2010 to SR920 million from SR851 million in 2009. For the first quarter, it expects a net profit of SR180 million excluding capital gains.

The firm has said its first-quarter earnings would be boosted by capital gains worth 200 million riyals after the listing of fast food chain Herfy.

Savola expects its food business to raise its net profit 12.5 percent in 2010 to SR450 million and its plastic business ot raise net profit by 16.5 percent to SR120 million.

It expects its retail business -- through the al-Azizia Panda supermarket chain-- to raise by 126.2 percent its net profit to SR190 million.

"We had 113 stores by the end of 2009, we plan to add at least 12 within the kingdom by end-2010," Amin Kashgari, the President of Savola's Retail and Real Estate division told Reuters in a telephone interview.

"We made sales worth about SR7.3 billion in 2009, we expect these to rise to SR9.5 billion and may be SR10 billion in 2010. In any case we will make a record sales growth in 2010," he added.

"We expect a recovery in domestic demand. Of course, demand for staples does not get affected greatly by crises but we also sell electronics and electric home appliances," he said.

Al-Azizia Panda, 80 percent owned by Savola, completed in October the purchase of some assets held by supermarket chain Geant Saudi Arabia for cash and stock, in its second retail acquisition since 2008.

The acquisition enabled Savola's retail business to raise its share of the Saudi retail market to 8 percent from 7 percent and would increase its turnover by 13 percent, Savola said.

This means an extra SR1 billion to Panda Azizia's turnover, Dubai-based Shuaa Capital said.

Al-Azizia competes with France's Carrefour and the local Abdullah Al-Othaim Markets Co. (Reuters)

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