Almarai’s Q1 earnings broadly in line with estimates: Aljazira Cap

Almarai Co’s first-quarter 2019 net profit of SAR 336 million came in line with Aljazira Capital and consensus estimates’ of SAR 351 million and SAR 345 million, respectively, the brokerage said in an earnings review on Sunday.

The relatively minor deviation came due to higher than estimated COGS and marginally higher than estimated finance cost, it noted.

The company’s revenue of SAR 3.35 million beat the brokerage’s estimate of SAR 3.22 billion, registering the first year-on-year (YoY) increase after four consecutive quarters of revenue decline.

Almarai reported 3.6 percent YoY decline in gross profit to SAR 1.21 billion slightly missing Aljazira Capital’s estimates of SAR 1.22 billion due to higher input costs driven by higher alfalfa costs and one-off crop rotation costs.

“Although the company was able to gain market shares in some categories; margins in FY19 may be under pressure due to fully imported alfalfa and additional increase in expat fee. However, the company’s ability to continue focusing on cost, is the key support for future performance,” the report said.

The brokerage maintained its “neutral” rating on the stock, revising the target price lower to SAR 53 a share.