First Mills logs higher revenues on flour sales growth, eyes boosting market share: CEO

First Milling Co. (First Mills)achieved an 8% year-on-year (YoY) rise in flour sales, supporting net revenues by the end of the first quarter of 2024, CEO Abdullah Ababtain told Argaam in an interview.

The growth was backed by an increase in small package sales by 27% YoY, improving the company's product mix with higher profit margins.

According to the company’s latest report dated Dec. 31, 2023, First Mills’ market share in the flour industry reached 30% in sales volume, which reflected the company's position as a reliable partner across the Kingdom.

The company continues to move forward with its expansion projects and looks forward to maximizing that share for all other products, not only in flour, while continuing to promote itself as a leading milling firm in the Kingdom.

Ababtain stated that the strong growth in sales was verified by the operation’s return and the upgraded capacity of Mill C in the Jeddah factory, in addition to the Ramadan season.

He pointed out that First Mills aims to expand its ambitious strategy and will see its positive results across several mills in Q2 2024.

In addition, the company plans entry into new businesses with higher profit margins, which will support revenues and profit.

Below is the full interview with Abdullah Ababtain:

Q: The company's profit rose to SAR 77.7 million by the end of Q1 2024, compared to SAR 73.8 million in Q1 2023. How do you see these results?

A: Overall, First Mills recorded growth in revenues of 8.2% YoY, reaching SAR 276 million in the first quarter of 2024, while we achieved a 5.4% YoY rise in net profit to SAR 77.7 million. Profit margins reached SAR 28.1 million.

This outstanding financial performance was due to the company’s high ability to seize available market opportunities, achieving growth in both flour and feed sales by 8% and 27%, respectively.

This strong growth in sales was supported by the return of operation and the upgraded capacity of Mill C in the Jeddah factory, in addition to the Ramadan season.

Q: What are the key factors impacting the rise in flour sales and drop in bran sales?

A: Sales growth of flour supported our revenues in Q1 2024, constituting 59% of the company’s total revenues, as it posted an 8% YoY rise in net revenues. The rise was supported by a 27% increase in small package sales, which contributed to improving the company’s product mix with higher profit margins.

Meanwhile, bran witnessed lower sales due to a directive to support feed production.

Q: What was the total output capacity of your factories by Q1-end?

A: First Mills covers four strategic regions across the Kingdom through its factories in Makkah (Jeddah), Al Qassim Province (Buraydah), Tabuk, and Eastern Province (Al Ahsa).

The factories have a total grinding capacity of 4,900 tons per day of flour, including 250 tons per day from Mill C, 300 tons per day from Durum Mill, 150 tons per day from PESA Mill, and a feed production capacity of 900 tons per day.

Q: How did improving the company’s product mix impact financial performance? What steps did it take to achieve this improvement?

A: As I mentioned before, product mix was one of the core factors contributing to revenues and profit growth in Q1 2024. It proved our leading position and insistence to achieve the company strategy. We depend on retail and distribution channels at the levels of individual and institutional customers. This is in addition to our constant focus on creating high-quality products and providing diverse options to satisfy customer needs while pledging high quality as one of our basic pillars.

We are already reaping the benefits of this strategy, as small package sales hit 27% YoY, accounting for 15% of flour product sales, which improved the quarter margins.

Q: What is your market share?

A: According to our latest reports as of Dec. 31, 2023, First Mills has a 30% market share in the flour industry in terms of sales volume, which shows our leadership position as a reliable partner in the Kingdom.

We continue to move forward with our expansion projects, looking forward to boosting our share across all other products to become a leading milling provider in the Kingdom.

Q: What are your expectations for demand and performance in Q2 2024?

We are committed to expanding our ambitious strategy and are seeing its positive impact on several projects, including PESA Mill, Pre-Mix Plant, and Durum Mill. We are actively pursuing expansions into new businesses with a focus on achieving higher profit margins to support our revenues and profitability.