Saudi dairy giant Almarai sells 33% stake in United Farmers Holding to founding partner
Almarai, the Arabian Gulf’s largest dairy company, said it had completed the sale of its shares in United Farmers Holding Company to Saudi Agricultural and Livestock Investment Company (Salic) for 105 million Saudi riyals (Dh103m).
Salic is one of the founding partners of United Farmers Holding Company, which is a joint venture equally owned by Salic and two private sector companies in Saudi Arabia.
Almarai’s stake in United Farmers represented 33 per cent of paid-up capital. The sale was completed after the parties obtained the necessary regulatory and legal approvals, Almarai said in a statement yesterday to the Tadawul stock exchange, where its shares are listed.
The financial impact of the transaction takes effect as of the fourth quarter of 2018, and is not material to the company’s financial statements, it added.
The proceeds from the transaction will be used to support Almarai’s business and investments.
Almarai struggled to maintain profitability in 2018 as it grappled with headwinds including a general slowdown in the GCC consumer goods market, the introduction of 5 per cent VAT, an expatriate levy in Saudi Arabia and other structural economic changes. These have driven higher costs in energy and transportation and altered demographics.
The company’s third-quarter 2018 net profit dropped by 4.9 per cent to 634.5m riyals compared to a year earlier, and sales for the period for broadly flat at 3.37 billion riyals. Almarai attributed the drop to higher cost of sales and exports and a general contraction of the market.
In the second quarter, it reported a 2 per cent year-onyear drop in net profit.
Almarai chief financial officer Paul Gay told The National in October the company expected to issue a new sukuk by the end of 2018 as part of an ongoing debt refinancing strategy.
The company paid back its previous capital sukuk of 1.7bn riyals in September, and has about 12bn riyals of debt on its balance sheet. The new sukuk would be used to “refinance existing debt”, Mr Gay said at the time.
Almarai struggled to maintain profitability in 2018 as it grappled with a slowdown in the GCC consumer goods market