Almarai says subsidy removal to impact dairy segment by SAR 150-170 mln beyond 2020

Almarai Co. said in a bourse statement on Tuesday that the abolition of non-green fodder subsidy will impact both poultry and dairy segments.

For the poultry segment, the non-green fodder feed input subsidy process will be replaced with subsidy on final poultry output. The net financial impact on this segment is expected to be minimal and financially insignificant for 2020 and the following years.

In the dairy segment, Almarai noted that the subsidy removal impact on the dairy segment is expected to be immaterial for 2020 due to subsidy receipts prior to the abolition decision. The financial impact is expected to range between SAR 150 -170 million per annum after 2020.

Almarai said it will maintain focus on business efficiency, cost optimization and other initiatives to help mitigate the financial effects of these changes in the subsidy in the long term.

In December 2019, Saudi Arabia’s Ministry of Environment, Water and Agriculture announced that it will launch a new regulation that entails granting subsidies directly to the poultry projects in the Kingdom as of Jan. 2020.