Almarai sales climb as cost pressures persist

Almarai’s second-quarter revenue rose 11 per cent year on year to SAR5.87 billion, as stronger demand for dairy, poultry and bakery products helped the Riyadh-listed food group absorb higher shipping, energy and raw material costs.

The company’s first-half revenue reached SAR12.03 billion, up 9 per cent from the same period last year, reinforcing its position as one of the Gulf’s most closely watched consumer staples groups. Net profit for the quarter stood at SAR635.7 million, broadly resilient but slightly lower than last year’s SAR647 million, as cost inflation and higher funding expenses weighed on margins.

The results point to a business still benefiting from population growth, consumer spending and food security investment across Saudi Arabia and wider regional markets, while facing the same pressure on logistics, feed, energy and financing costs that has affected large food producers globally. Operating profit held steady at about SAR814 million, suggesting that volume growth, pricing discipline and cost-control measures helped offset pressure in parts of the supply chain.

Almarai’s performance was led by poultry and dairy, two categories that remain central to the company’s expansion strategy. Fresh dairy accounted for SAR1.99 billion of second-quarter revenue, or about 34 per cent of sales, while the protein segment generated SAR1.16 billion, representing about one-fifth of quarterly revenue. Bakery contributed SAR747 million, food products SAR655 million, long-life dairy SAR561 million, fruit juice SAR515 million and water SAR110 million.

The protein division, which includes poultry, remained one of the strongest growth drivers, with revenue rising 16 per cent year on year. Its performance reflected higher volumes, capacity expansion and broader distribution. Bakery revenue increased 8 per cent, aided by product mix and sales execution, while dairy and juice revenue rose 6 per cent, supported by demand for core products despite pressure from logistics costs.

Saudi Arabia remained Almarai’s largest market, generating SAR3.82 billion, or about 65 per cent of second-quarter revenue. The company also recorded strong contributions from the UAE, Egypt, Kuwait, Jordan and Oman. Egypt delivered notable growth in local-currency terms, reflecting the group’s ability to expand in a market marked by currency weakness and changing consumer behaviour.

Traditional trade remained the company’s largest sales channel, contributing SAR3.34 billion, or 57 per cent of second-quarter revenue. Modern trade accounted for SAR1.31 billion, while food service generated SAR949 million. Export and other channels contributed SAR269 million, indicating that domestic distribution still drives the bulk of the group’s revenue base, even as regional sales provide growth opportunities.

Chief executive Fawaz Al Jasser said the quarter reflected “strong growth momentum” across core product categories, particularly poultry and dairy, and said disciplined execution and cost management had helped deliver resilient financial performance. He said the company remained committed to food security, market leadership and product innovation.

The company’s first-half figures showed the same pattern. Revenue rose by SAR973 million to SAR12.03 billion, while net income slipped 1 per cent to SAR1.37 billion. Operating profit was almost unchanged at SAR1.69 billion. Fresh dairy generated SAR4.14 billion in first-half revenue, protein SAR2.27 billion, food SAR1.64 billion and bakery SAR1.41 billion.

Almarai’s growth comes as Saudi Arabia continues to prioritise food security and local production under its economic diversification agenda. The company has already outlined a multi-year investment programme of more than SAR18 billion through 2028, covering poultry expansion, core product categories, supply chain capability, technology and regional growth. A significant part of the plan is aimed at strengthening production resilience and reducing exposure to external shocks.

The strategy has become more important as Gulf food producers manage volatile input costs, higher interest rates and changing consumer preferences. Feed and freight costs remain particularly important for dairy and poultry producers because margins are sensitive to global commodity movements. Energy, packaging and distribution costs also continue to affect profitability across chilled and fresh food categories.