| Increase (Decrease) in Net Profit for Current Year Compared to Last Year is Attributed to |
Net profit for the year increased from SAR 216Mln to SAR 265Mln (+SAR 49Mln, +22.7%) driven by higher sales and margins. Net Sales of milk were up +14%, ice cream + 15% and tomato paste +6%, which together contributed to an overall increase of 12%, delivered by growth across all channels. Higher milk sales were primarily driven by less intense discounting (same high frequency of promotions, less deep reductions), which was seen across the category. Margins improved from 32% to 33.5%, driven by lower promotional intensity in the milk category and a higher proportion of sales of ice cream, delivered through distribution expansion across our markets. Raw materials cost increases flowed through during Q3 and Q4 but a combination of sourcing from our Polish subsidiary, Mlekoma, and the greater positive impacts of the factors noted above, meant that the margin still improved. Selling and distribution overheads increased from SAR 266Mln to SAR 301Mln (+34.6Mln, +13%) mainly due to higher manpower costs associated with delivering higher sales and increased depreciation relating to more sales vans and ice-cream freezers being deployed in the market. In addition, we increased the investment in brand building A&P. G&A overheads increased from SAR 92Mln to SAR 101Mln (+SAR 8.5Mln, 9.3%) mainly due to higher manpower costs. The Company continues to focus on developing and retaining local national talent which entails additional training costs. Finance costs increased due to implementation of IFRS 16. Additional provision for trade receivables of SAR 12.7 million was considered prudent and is included in the results due to the current economic situation arising from Covid 19. This relates to all our businesses in KSA and Gulf. |
| Additional Information |
The outbreak of Covid-19 had a minimal impact on our results for 19/20 as it only really started being felt in the last fortnight in March. Our prioritization during this time is on the safety and wellbeing of our employees, their families, the community we operate in and our stakeholders. 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 SAUDIA branded products, during these challenging times. This last year’s performance represents a strong recovery following the previous couple of years where sales and profits fell. All three pillars grew sales and market share positions were at least in line with the prior year on a MAT (moving annual total) basis. Our Polish powder subsidiary had a stronger year as well, partly the result of higher global milk commodity prices and also due to consistently higher factory utilization. In Q3, we announced the purchase of a facility that we are now working to convert into a new ice cream factory to support both our medium and long term growth objectives but also new product format launches. During Q3, the board approved an increase in the interim dividend that was paid in December from SAR 2.0 / share to SAR 2.5 / share. The bank balance at the end of March stood at SAR 646Mln. Earnings per share The earnings per share is computed as follows: Profit attributable to owners of Sadafco SAR 266,260,000 Total shares 32,500,000 Treasury shares held by the Company 500,250 Total shares outstanding 31,999,750 EPS 8.32 |
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