Saudi Arabian food and beverage conglomerate Almarai has acquired 37.6 per cent of Pure Breed Company for 52.9 million Saudi riyals ($14.1 million), it said in a bourse filing on Monday.
Almarai now owns 93.5 per cent of Pure Breed.
The transaction was fully financed from Almarai's operating cash flows.
Pure Breed's main operations are focused on poultry broiler grandparent farming.
"The increase in shareholding will add to Almarai on-going efforts to further strengthen the poultry industry in Saudi Arabia and GCC, and secure its supply of poultry parent stock," the company said.
The company’s poultry division was its best performer in the first half of 2019, when profits surged 36.2 per cent mainly driven by revenue growth of 20 per cent, it said in a statement in July.
Almarai’s overall gross profit for the first six months of 2019 dropped 1.1 per cent due to higher costs, mainly for alfalfa, feed and labour, it said in July.
The company’s operating profit dropped 2.4 per cent to 1.22 billion riyals for H1 2019 compared to 1.25 billion riyals for the same period last year.
Revenue increased 3.1 per cent from 6.86 billion riyals for H1 2018 to 7.07 billion riyals in H1 2019 but cost of sales also increased from 4.2 billion riyals to 4.44 billion riyals.
The company attributed the rise in revenue to its poultry and fresh dairy divisions, followed by bakery and food segments.
Almarai said there was “general weakness” in fresh dairy and juice that it said “continued” in 2019.
The F&B giant is also strengthening its foodservice business. In February it bought Riyadh-based Premier Foods, which manufactures value-added halal meat and poultry products for the foodservice sector.
Almarai's biggest shareholder is Saudi Arabia's investment holding company Savola Group, which owns 34.5 per cent of the company.
($1 = 3.75 Saudi riyals)
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