Saudi Dairy Foodstuff Company (Sadafco) has seen “minimal impact” so far of the coronavirus pandemic on its finances despite the overall decline in consumer spending, the company said in a Zawya report.

The Saudi-listed firm, which reported a net profit of SR265 million ($70 million) during the 12-month period ending on March 31, also assured that its assets remain operational despite the disruptions caused by the health pandemic.

“The outbreak of Covid-19 has a minimal impact on our results from 2019/2020 as it only really started being felt in the last fortnight in March. Our [priority] during this time is the safety and wellbeing of our employees, their families, the community we operate in and our stakeholders,” the company added.

“Our depots and factories have continued to run, in accordance with the prevailing government guidelines, as we seek to ensure our customers continue to receive [their products],” it added.

The fast-spreading virus, which has now infected more than 3.4 million people, has led to widespread lockdowns and border closures. Some factories shut down operations, while non-essential businesses closed their doors to contain the spread of the virus.

Matthijs: reaching out during Covid-19 crisis

Consumers have consequently retreated to their homes and cut back on spending on non-essential items. However, despite the disruptions, Sadafco’s figures showed that demand for dairy products increased during the beginning of the outbreak.

The company enjoyed a 14 percent increase in net sales of milk, while ice cream sales went up 15 percent during the 12-month period ending March 31 this year.  Sales of tomato paste also jumped 6 percent.

Sadafco did not specify if the intense stockpiling of essential goods by consumers at the start of the outbreak had helped fuel their sales.

“Higher milk sales were primarily driven by less intense discounting (same high frequency of promotions, less deep reductions), which was seen across the category,” the company said.

At the same time, margins improved from 32 percent to 33.5 percent. This was driven by “lower promotional intensity” in the milk category and higher proportion of sales of ice cream, delivered through distribution expansion across the company’s markets.

The number coronavirus cases continues to rise in Saudi Arabia, but the kingdom has recently allowed commercial establishments, including malls, to reopen to reduce the financial toll of the global pandemic.

Minister of Finance and Acting Minister of Economy and Planning, Mohammed bin Abdullah Al-Jadaan, said that the economic toll of the health crisis is likely to be felt in the coming quarters.

He, however, noted that there has been a significant decline in revenues amid falling oil prices. Non-oil revenues are also expected to drop as a result of the huge reduction in economic activity.

Meanwhile, the board of Sadafco recommended the distribution of cash dividends to shareholders for the fiscal year (FY) ended 31 March 2020.

At SR 2.5 per share, the proposed dividends stand at a total amount of SR 81.25 million. Dividends represent 25 per cent of the share’s par value, according to the company’s statement to the Saudi Stock Exchange (Tadawul). The distribution date will be announced later.

CONTRIBUTES FUNDS

Also, in support of Covid-19 relief efforts, Sadafco Bahrain is contributing SR1 million in cash and Saudia products to “Fina Al Khair” initiative, by the Royal Humanitarian Foundation in support of the Covid-19 relief programmes to protect the health and safety of citizens.

This initiative reflects Sadafco’s strong commitment to the principle of Corporate Social Responsibility (CSR) and its support for programmes that promote social stability, the company said in a statement.

As regional countries gradually begin to relax Covid-19 lockdowns, Sadafco’s contribution of essential foodstuffs will help families affected by the loss of earnings and income during the recent period of social distancing, it added.

Wout Matthijs, CEO of Sadafco, said: “As a major regional manufacturer of foodstuffs, and as a company with a strong sense of our responsibilities to society, it is vitally important that we step up to help families impacted by the Covid-19 outbreak. We are working closely with organisations in Bahrain to ensure that those in need are receiving everyday essentials.”

The contribution lies at the heard of Sadafco’s promise to address social causes and raise awareness of the plight of those facing extraordinary circumstances. In the face of adversity, Sadafco moves forward with its determination to be a force for good in the countries in which it operates.