| The reason of the increase (decrease) in the net profit during the current quarter compared to the same quarter of the last year is |
Referring to our Q1 commentary we had identified various adverse macro level factors which affected our previous quarter results. We see easing of some elements, such as a) school opening, b) relaxation of covid restrictions, c) reduction in irrational pricing behavior, all leading to better business dynamics. In 2022, we expect cost of raw materials to remain firm and up. International logistics will remain challenging. Despite all this, we have been able to serve the market in an adequate manner. Net Profit for the quarter is at healthy 10%, a significant improvement over last quarter. Net profit margin for same quarter last year was 13% due to lower cost of raw materials and logistic costs. We have been successful in maintaining the revenue in line with last year, as new products have started delivering benefits. Gross Margin of 31% this year vs. 33% same quarter last year despite all the challenges, driven mainly by higher contribution of more profitable Ice Cream business. Selling and Distribution and General and administrative (G&A) expenses are the same level of last year. |
| The reason of the increase (decrease) in the net profit during the current period compared to the same period of the last year is |
Net profit in the period was SAR 91.7Mln, which is SAR 49Mln (35%) below the same period last year. This is a result of lower sales value driven by favorable Covid related tailwinds last year (especially in Q1), higher raw materials prices and VAT imposition since Q2 last year. Last year Q1 had VAT of 5% while this year 15% VAT has been in place throughout this year resulting in lower selling price/liter vs last year. However, we do see early signs of reduced irrational pricing behavior leading to improved market dynamics. Also, this year we had a favorable product and channel mix. Overall, this resulted in GPC of 31% vs. 33% last year despite the higher raw material costs. The sales and distribution expenses increased marginally to 15% vs. 14% last year due to increase in routes and distribution focus. |
| Additional Information |
SADAFCO has been awarded use of the prestigious “Saudi Made” logo which is being rolled out. Work on New Ice Cream Factory continues at full pace. We started trial production with commercial production expected in Q1’22. The upgrade project of Jeddah Milk Factory is expected to be completed end of this year. This project caters to capacity increase at improved efficiency levels. We continue to generate healthy cashflow leading to a strong cash position of SAR 619 Mln contributing to a robust financial position. Shareholders’ equity up at a healthy 1.532Bln vs 1.517Bln at 30 Sep 2021. The earnings per share is computed as follows: Profit attributable to owners of SADAFCO SAR 92,205,000 Total shares 32,500,000 Treasury shares held by the Company 500,250 Total shares outstanding 31,999,750 EPS 2.88 |
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