Almarai: interim consolidated financial results for H1/2014

Riyadh / SA. (ac) Almarai Company is pleased to announce its interim consolidated financial results for the period ended 30 June (Q2/2014) and the first half (H1/2014):

  1. For the second quarter ended 30 June 2014 Almarai generated a consolidated net profit amounting to 433,3 million SAR, an increase of 8,8 percent compared to the same period last year (SAR 398,2 million) and an increase of 58,4 percent compared to the first quarter 2014 (273,6 million SAR).
  2. The total gross profit for the second quarter ended 30 June 2014 amounted to 1’138,4 million SAR, an increase of 10,0 percent compared to the same period last year (1’034,5 million SAR).
  3. The operating profit for the second quarter ended 30 June 2014 amounted to 507,5 million SAR, an increase of 4,9 percent compared to the same period last year (484,0 million SAR).
  4. The consolidated net profit for the first six months ended 30 June 2014 amounted to 706,9 million SAR, an increase of 8,2 percent compared to the same period last year (653,3 million SAR).
  5. The Earnings Per Share (EPS) based on Net Income for the six months ended 30 June, 2014 was 1,14 SAR compared to 1,09 SAR for the prior period. Note that the basic EPS is calculated by dividing the net income, attributable to shareholders for the period by the weighted average number of issued shares of 595,9 million and 596,7 million at 30 June 2014 and 30 June 2013 respectively. The weighted average number of shares has been retrospectively adjusted for the prior period to reflect the effect of the bonus share issue dated 9 September 2013.
  6. The total gross profit for the first six months ended 30 June 2014 amounted to 2’049,8 million SAR, an increase of 10,1 percent compared to the same period last year (1’862,3 million SAR).
  7. The operating profit for the first six months ended 30 June 2013 amounted to 817,9 million SAR, an increase of 4,2 percent compared to the same period last year (784,8 million SAR).
  8. The growth in net profit for the second quarter of 8,8 percent compared to the corresponding period of the previous year is due to the growth in quarter sales by 14,4 percent in core business segments, resulting in a growth overall in net profit except poultry. On the other hand the growth in Selling and Distribution expenses as well as in General and Administrative expenses, is due the continuous infrastructure expansion across product categories and geographies, and increasing depreciation costs from past investments.
  9. The growth in net profit for the six months ended 30 June 2014 of 8,2 percent compared to the corresponding period of the previous year is also due to the growth in sales YTD of 13,6 percent, from core business segments, resulting in a growth overall in net profit except poultry. On the other hand the growth in Selling and Distribution expenses as well as in General and Administrative expenses, is due the continuous infrastructure expansion across product categories and geographies, and increasing depreciation costs from past investments.
  10. The growth in net profit for the second quarter of 58,4 percent compared to the first quarter 2014 is due to rise in sales by 20,9 percent, as a result of the seasonal demand, which increases during the second and third quarters of each year compared to the first and fourth quarter, this sales pattern has a direct impact on net profit. Almarai believes that a comparison with the same period last year is more relevant because a quarter-to-quarter comparison is more aligned to similar market conditions and demand patterns.
  11. A summary of Consolidated Income Statement, during the second quarter and Six Months ended on 30 June 2014:
    • The Sales increase 14,4 percent to 3’286,5 million SAR during the second quarter, compared with 2’873,9 million SAR in the same quarter 2013. And thus the sales of the first half of 2014 to 6’005,4 SAR compared to 5’284,9 SAR for the same corresponding period of 2013, an increase of 13,6 percent.
    • The Earnings Before Interest, Taxes and Zakat, Depreciation and Amortization (Ebitda) increase 6,5 percent to 773,6 million SAR during the second quarter, compared to 726,6 million SAR in the same quarter 2013, it is down to 23,5 percent of sales compared with 25,3 percent in the same quarter 2013 and it increased 8,2 percent to 1’337,8 million SAR during the six months ended on 30 June 2014, compared to 1’236,3 million SAR in the same period last year, it is down to 22,3 percent of sales compared with 23,4 percent in the same period of 2013.
    • The Gross profit, Operating profit and Net profit are representing 34,6 percent, 15,4 percent and 13,2 percent of the sales for the second quarter 2014 compared to 36,0 percent, 16,8 percent and 13,9 percent in the same quarter in 2013, respectively. They are representing 34,1 percent, 13,6 percent and 11,8 percent of the sales for the six months ended on 30 June 2014 compared to 35,2 percent, 14,9 percent and 12,4 percent in the same period of 2013, respectively.
  12. A summary of Consolidated Cash Flows Statement, during the six months ended on 30 June 2014:
    • The Cash Flow Generated From Operating Activities reached 1’311,3 million SAR for the period ended 30 June 2014, an increase of 28,7 percent compared to 1’018,7 million SAR in the same period last year. Improved working capital management, higher depreciation and the growth in net income explain this very strong increase.
    • During the period ended 30 June 2014 1’628,9 million SAR were used in Investing Activities principally due the continuation of the capital investments projects as per the five year strategic plan, the acquisition of the IPNC shares and the purchase of farm land in Arizona USA, as well as the expansion of the distribution facilities throughout the GCC.
    • The Cash Flows Used in Financing Activities reached 427,3 million SAR during the period ended 30 June 2014, an increase of 1’119,0 million SAR compared to 691,8 million SAR generated in the same period of 2013, mainly because of the Sukuk cash inflow from early 2013.
    • Net Cash Used during the period was 747,7 million SAR, bringing the balance of cash and cash equivalents at the end of June 2014 to 1’062,8 million SAR.
  13. A summary of the consolidated balance sheet as at the end of June 2014:
    • Total assets, amounted 23’895,3 million SAR compared to 21’046,3 million SAR as at end of June 2013, an increase by 13,5 percent.
    • Net working capital, amounted 1’795,8 million SAR compared to 1’331,3 SAR as at end of June 2013, an increase of 34,9 percent.
    • Total liabilities, amounted 12’920,7 million SAR compared to 12’771,3 million SAR as at end of June 2013, an increase of 1,2 percent.
    • Net debt, amounted 8’993,6 million SAR compared to 9’570,0 million SAR as at end of June 2013, an decrease of 6,0 percent. And it stands at 81,9 percent of the total equity compared to 115,6 percent as at end of June 2013.
    • Total shareholders´ equity amounted 8’530,6 million SAR compared to 7’658,3 million SAR as at end of June 2013, an increase of 11,4 percent. And the book value of the share at the end of June 2014 is 14,22 SAR.
  14. Expectations of the third quarter 2014:
    • Without any external influences, Almarai expects increasing growth in products demand in its core businesses during the third quarter of 2014, which includes the high seasons of the holy month of Ramadan, this growth is expected to be fulfilled with the existing production and distribution facilities, as a result the growth in sales is expected to continue for the third quarter. Our ability to meet the growing demand will be fulfilled thanks to the prior investments realized in the productivity and efficiency of our farms, manufacturing and distribution facilities, as well the new products introduction flow during the first six months of the year.
    • In contrast, Almarai´s net profit growth over the same period has been affected by the increase in labor costs, mainly because of the localization programs, the persistent increase and volatility in some raw material costs, in particular dairy commodities, and the fact that the overall cost basis is put in place in advance of future sales growth.
  15. Overall the company is satisfied with its business performance which is in line with its strategic development plan that contributed in increasing production capacity to serve our valuable customers and leads to strong growth indicators of increased sales of 13,6 percent, increased gross profit of 10,1 percent and increased net profit of 8,2 percent over the first six months of 2014 compared to the same period of 2013.
  16. Some prior period comparatives have been regrouped to conform to current period classification.
  17. Almarai would like to draw the attention of the shareholders to the interim consolidated financial statements for the second quarter 2014, available through a link on Almarai website.
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