Almarai’s fourth quarter net profit came in weak, with net income broadly flat year-on-year (YoY) at SAR 489 million and below NCB Capital’s estimate of SAR 540 million, the brokerage firm said in a results review.
“We believe the variance is attributed to weak revenue growth, from a weakness in the dairy and juice segments (-2.4 percent, YoY), and higher financing or foreign exchange charges,” NCB Capital said.
However, strong margin expansion from lower operating expenses and improved poultry sales were the key positives of the results, the agency said.
Gross margins stood at 40.5 percent versus NCB Capital’s expectations of 38.6 percent; and operating expenses came in at SAR 799 million against an expectation of SAR 851 million.
Losses in the poultry segment declined to SAR 42 million in Q4 – from SAR 49 million in same quarter in 2015 – supported by better operational efficiencies.
NCB Capital has a ‘neutral’ rating on the dairy and juice producer, with a target price of SAR 52.7 per share.
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