Horizon Food expects SAR 150 mln revenue, 15% profitability in 2024

Acting CEO Ahmed Alarfaj 

Horizon Food Co. will likely generate SAR 150 million in revenue and a profit rate of 15% for 2024 upon the completion of the company’s plant expansion project, acting CEO Ahmed Alarfaj told Argaam.

The fast-food business currently witnesses fierce competition in addition to the volatility in the cost of raw materials and operating expenses, Al Arfaj explained, adding that this will increase the restaurants’ demand for the company’s main products to cut costs and maintain quality.

In addition, Al Arfaj revealed the company's plans to sell its products in retail markets by the end of this year, as it will offer frozen shawarma. He further talked about growth expectations in the fast-food restaurant segment, details of the company's factory expansion plan, and the company’s transition to the main market of the Saudi Exchange (Tadawul).

The following are the details of the interview:

Q: How do you evaluate the competition prevailing in the Kingdom’s fast-food industry in terms of sales, costs, and profitability? How does this affect your business?

A: The Kingdom’s fast-food business size reached around 7,000 restaurants worth SAR 15.5 billion in 2022, with revenue increasing from these restaurants.

Burgers dominated the lion’s share of 38%, or nearly SAR 6 billion, of the fast-food meals served in these restaurants. Demand for these meals is expected to rise at an annual rate of over 9% over the coming four years. These meals comprised burgers, shawarma, and pizza.

Shawarma had the second highest share of 18.5%, or SAR 2.8 million, with a 5% growth rate.

Horizon Food dominates around 2% of fast-food restaurants, and there is huge room to grab more market share, especially after the completion of the factory expansion project.

Q: Are there untapped opportunities in the market that Horizon Food can capture?

A: The frozen food market is constantly growing in terms of product diversification, quality, and demand.

The market value is estimated at SAR 3 billion and is forecast to increase by two-fold by 2023 due to ongoing development across the Kingdom and changing consumption patterns, as the market witnesses an increasing need for frozen food compared to the previous period.

The company is seeking to explore more food service solutions amid the changing nature of business and the need to find new food service products to cut operating expenses and enhance quality.

Q: What about the supply contracts with the company’s clients until 2023-end?

A: We have supply contracts at a total value of approximately SAR 30 million with major clients, in addition to other contracts with smaller clients representing the larger share.

Q: Horizon Food’s H1 2023 profit dropped 44% year-on-year (YoY) to SAR 2.6 million. Would you like to comment?

A: We have experienced some administrative restructuring in H1 2023, which somehow weighed on the company’s results. However, we did well in terms of profitability given the sales volumes.

The company is now stable after the formation of a new board of directors. This will reflect positively on results over the coming period.

Q: What about the geographical distribution of the company’s revenue and profit locally and in the GCC?

A: Saudi Arabia dominates 95% of the company’s products, with the Central Region accounting for 35%, the Eastern Region (30%), and the Western Region (25%), while the GCC accounts for 5% of sales.