SADAFCO sees robust growth in market share of all segments: CEO

Patrick Stillhart, CEO of Saudia Dairy and Foodstuff Co. (SADAFCO)

Saudia Dairy and Foodstuff Co.'s (SADAFCO) market share has seen robust growth in all its three segments, as per Nielsen data, said CEO Patrick Stillhart told Argaam in an interview.

The market share in the UHT milk segment advanced to 54.4%, with rising shares resulting from different parts of the dairy portfolio. As for tomato paste, it grew to 56.6% amid strong performance during the month of Ramadan and towards the end of the year, while the market share of the ice cream segment increased to 31.4%, he added.

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The CEO also highlighted that the products with strong demand, which contributed to supporting revenues, vary from dairy products, tomato paste and ice cream.

The company has seen sturdy performance, thanks to its continued focus and investments in sales, distribution, marketing and production facilities to boost growth and help achieve additional efficiency across all value chains, he stressed.

The CEO also pointed out that export sales are increasing at a double-digit rate above SADAFCO's annual growth rate. Further, these sales are set to maintain this trend through looking for vertical and horizontal expansion opportunities, with a special focus on countries in Africa, Asia and the Middle East.

SADAFCO Poland, the holding company of Mlekoma, was also affected by non-operating expenses such as sell-option costs and the impact of recognized value, which were fully addressed in 2023, he added.

Regarding expansion and acquisition plans, the CEO said SADAFCO is currently evaluating potential acquisition targets in different geographical regions, which could support the company's growth.

Furthermore, SADAFCO is evaluating partnership opportunities such as joint mobilization and cooperation with outsourcing companies, especially if there is an additional capacity available, if the proposals address a market opportunity and achieve financial feasibility. If any deal is finalized, it will be announced through Tadawul, he stated.

Commenting on the impact of the Red Sea tensions, Stillhart pointed out that SADAFCO redirected most shipping destinations to Dammam Port only to ensure the supply side and mitigate any impact of shipping disruptions.

However, if this situation continues, the company will likely face some additional costs for shipping materials and equipment supplied from Europe, said the CEO, adding that it is working to offset this by boosting inventory levels for several materials and components required in local production operations.

He also stressed that this situation also shows that the company's local plants and presence in the Kingdom are considered a strength point that ensures reliable supply to customers and consumers.

As for the increase in diesel prices, Stillhart explained that SADAFCO was prepared for this price hike and is working to mitigate the impact through initiatives to save energy consumption and move to clean or alternative energy sources quickly.

Among the methods used to reduce diesel consumption is the installation of new steam pipes in terms of energy consumption, which can also operate with liquified petroleum gas (LPG). This is in addition to expanding the improvement of fleet transport routes and reducing downtime for vehicles, he added.

SADAFCO earlier reported a net profit of SAR 327.6 million for the nine-month period ended Dec. 31, 2023, a 50% increase from SAR 218.3 million in the year-earlier period. The Q3 2023/24 net earnings leapt 33% year-on-year (YoY) to SAR 104.6 million, according to Argaam's data.