Saudi food group Almarai is putting up a capital investment of 6.6 billion riyals ($1.76 billion) to double its market share in poultry over the next five years.
The company said in a Saudi Exchange filing on Monday (May 3) that the project will be funded through internally-generated cashflows.
The expansion will include grandparent farming and production facilities to enable full vertical integration. It will focus on different locations in Saudi Arabia to facilitate biosecurity in poultry farms, said the company behind the Alyoum brand.
Moody’s investor service said on Tuesday the new investment will more than double Almarai’s poultry segment assets from 5.5 billion riyals at the end of 2020.
The analyst said that assuming the investments will double the company’s poultry segment revenue, they will increase Almarai’s income by 15% over the next five years from 15.4 billion riyals in 2020.
Almarai owned seven farms and poultry comprised 15% of its revenues at the end of 2020. 62% of its revenue last year came from dairy, according to Moody’s.
Almarai operates in its home market Saudi Arabia as well as across the Middle East.
The company had a good 2020 in spite of the pandemic, posting a 9.5% increase in net profit to 1.98 billion riyals ($0.53 bln) compared to 1.81 billion riyals in 2019.
More recently, its revenue increase of 1.46% to 3.65 billion riyals ($0.97 billion) for the first-quarter was driven mainly by dairy and other sales.
Almarai is 34.52% owned by Saudi food conglomerate Savola, 23.69% by Prince Sultan Mohamed Saud Al Kabeer Al Saud, and 16.32% by SALIC, the state-owned Saudi Agriculture and Livestock Investment Company.
The Riyadh-headquartered company's plans to expand its poultry business is in line with Saudi Arabia’s goal of 80% self-sufficiency in chicken meat by 2025. It currently stands at over 60%.
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