Saudia Dairy and Foodstuff Company (Sadafco), a leading dairy and foodstuff producer, has managed to deliver steady growth despite the overall challenging market conditions.

The Saudi company’s net profit for the three-month period ending on September 30 surged to SR54 million ($14.6 million) on lower international commodity prices combined with favourable sales growth across its various categories.

The company registered an increase of SR4 million compared to the last quarter, on the back of 4.6 per cent higher sales.

Announcing the results, CEO Wout Matthijs said despite the current challenging market environment, Sadafco continues to strengthen its premium branded position and realise its financial goals.

Mathijs: expanding product portfolio

“We are also focused on investing in expanding our future product portfolio, which will further contribute to our success in the years to come,” he noted.

In the half year, April to September 2018, net sales were down 6 per cent excluding Melkoma, resulting from multiple headwinds (expat departure, higher labour costs, higher cost of living and lower consumer confidence).

“In addition, the domestic milk category has a glut of supply driving irrational price discounting by our customers, which we have sought to contend with,” noted Matthijs. 

During the last quarter, the Saudi dairy company had acquired 76 per cent of the Polish dairy powder producer Mlekoma Group for a transaction valued at SR120 million.

The acquisition will contribute towards delivery of powdered raw materials and blended semi-finished goods mixes for our use in the future, he stated. 

“Strong working capital ratios and free cash of SR484 million with zero debt, following our acquisition, meant Sadafco will continue to enhance shareholders value,” said the top official.

Shareholder equity for the period was valued at SR1.34 billion, a 1 per cent increase in comparison to SR1.321 billion for the same period last year.

Meanwhile, the company is expected to launch its new Jeddah Central Warehouse soon. The project, worth SR145 million, is expected to deliver future cost savings and improved effectiveness in the company’s supply chain, the company stated while announcing its third quarter results.

The Saudi company had in 2017 announced it is building two new warehouses in the cities of Jeddah and Tabuk as part of its expansion plans in Saudi Arabia.

Commercial operations at its Tabuk warehouse were launched early 2018 at a total cost of SR 17 million, the dairy producer said in a statement to Tadawul. The Jeddah warehouse was scheduled to be ready by the end of 2018, it stated.

The new warehouse will replace the existing leased facility to improve supplies and boost sales growth.

The projects, which are forecasted to have a positive impact on Sadafco’s profits, have an estimated value of SR162 million ($43.2 million), and will be fully financed by the company’s own resources generated through operations, according to a company statement.

“Developing and maintaining our new warehouses across the kingdom is an important element in the value chain of Sadafco. Our commitment to constantly deliver an outstanding level of service excellence to our customers, undoubtedly, impacts our robust performance in the market as well as influencing results positively,” remarked Matthijs.

“We want to further strengthen our growth path and performance in our industry and our new warehouse will help deliver this, as we will enhance servicing both the eastern and western provinces of the kingdom,” he stated.

“The new warehouses will provide long-term infrastructure solutions throughout the value chain, resulting in future cost savings, operational efficiencies and growth opportunities,” remarked Matthijs.

Based in Jeddah, Sadafco operates sales and distribution depots in 24 locations across Saudi Arabia, Bahrain, Jordan and Kuwait. Saudia products are also exported to several countries in the Middle East and North Africa (Mena) region.

The company currently operates three ISO22000:2005-certified factories in Saudi Arabia, two in Jeddah and one in Dammam. All three factories also have ISO14001 and OHSAS18001 accreditation.

Established in 1976, Sadafco is a leader in dairy and foodstuff manufacturing, importing, distributing and marketing in Saudi Arabia and has established a strong reputation and loyal following in the food and beverage industry across the GCC region.