Tanmiah says higher raw material prices affect profit, likely to improve in Q1 2022

Logo of Tanmiah Food Co.

Ahmed Osilan, Managing Director of Tanmiah Food Co., said prices of raw materials increased by 40-50% in 2021, which affected costs and earnings, Al Arabiya TV reported.

He added that the company’s 2021 sales grew by more than 27% compared to a year earlier, supported by business expansion. This, accordingly, led to an increase in operational capacity by 40%.

With the rise in the operational capacity and production as well as achievement of the company's strategic vision, the figures, sales and profitability will likely improve in the coming period.

The costs incurred by the company are also related to marketing the product and expanding the number of branches and outlets across the Kingdom, as part of the framework of the firm’s strategic plan.

Osilan expects an improvement in indicators and prices of raw materials at the end of the first quarter and the beginning of the second quarter, indicating that Tanmiah is currently taking measures to reduce costs of production, transportation, import and export.

The foodstuff producer did not add the entire cost increase to the final consumer, as prices were raised gradually, the top official said, noting that prices are reviewed every three months to match the final consumer prices.

The firm obtained the main franchise for the US-based Popeyes restaurants, which will contribute to improving the profit margin.

Tanmiah has opened five branches so far, Osilan concluded.

The stock was listed on the Saudi Exchange (Tadawul) in August 2021, according to compiled by Argaam.

The company reported a net profit after Zakat and tax of SAR 13.6 million for 2021, a slump of 82% from SAR 74.4 million in the year-earlier period.

In Q4 2021, the firm swung to a net loss of SAR 12.36 million against a net profit of SAR 30.38 million in Q4 2020.