Savola partly blamed its near-halving of year-on-year profit for the quarter on the sale of a property investment in Q3 2014, on which it made US$50m. The company had warned profits this quarter would be lower, because of difficult trading conditions, but beat its own forecast of US$94.7m in profit.
Missed analyst forecasts
Analysts polled by Reuters, though, had forecast the firm would make around US$110m for the quarter. Among other reasons for the fall in profit, Savola listed a reduction of income following the sale of its packaging division in Q1, and higher financial charges – but the company said other financial indicators were healthier.
“Gross profit increased for this quarter compared to same quarter of last year due to reduced cost of revenues despite lower revenues due to reduced commodity prices; operating income was lower due to increased operating expenses because of growth in retail operations compared to same quarter last year,” said Savola in a filing to the Saudi stock exchange.
While Savola’s gross income was higher, the company saw its Q3 revenues fall 4.6% to US$1.57bn, and its operating expenses rise almost 27% for the quarter, to reach US$266m.
Despite Almarai’s profit growth, it also missed analysts’ forecasts of US$160.7m in profit for the quarter, but only by a small margin. Its revenues were up 7.8% at US$939m and cost of sale rose only 6% to US$553.8m for Q3, but its operating expenses rose 16%, to reach US$206m.
Poultry on the up
The big growth sector was Almarai’s loss-making poultry division, which saw sales grow 15.9% in the quarter, followed by bakery at 9.2% and dairy and juice at 5.9%. While poultry is still not in the black, mostly due to the ongoing investments Almarai is making in the sector, the company said the division’s losses had narrowed significantly.
“Poultry losses declined to [US$13.09m] which represents 15.6% of segment sales compared to 2014 losses of [US$23.7m] which represented 32.5% of segment sales,” said the firm in its Q3 results statement.
In terms of profit, aside from the improved performance in poultry which saw losses fall by 44.8% year-on-year, bakery was the big earner for Almarai, with profits up 30.7%. Its core dairy and juice division saw a fall of 3% in gross profits for the quarter.