Al Othaim’s margins under pressure as price hikes not passed to consumers, all branches performing well: exec

Logo of Abdullah Al Othaim Markets Co.

Abdullah Al Othaim Markets Co. achieved record sales in the third quarter of 2022, which rose by more than 17% year-on-year (YoY), said Vice Chairman and Managing Director Bader AlAujan.

Profit margins are under pressure due to the company’s attempts not to pass price hikes to consumers and provide alternatives with quality and appropriate prices, noting that inflation rates in Saudi Arabia are among the lowest in the world, the top executive told CNBC Arabia TV.

He added that leasing decreased by 7% in Q3 2022, saying that all of the company's 297 branches in 75 cities across Saudi Arabia are showing a robust performance.

AlAujan also pointed out that Gulf Flour Milling Co. contributed SAR 10 million to Al Othaim’s Q3 2022 profit, indicating that the company recorded a SAR 30 million profit since the beginning of 2022.

When asked about the impact of rising interest rates on financing costs, he stated that the Saudi retailer borrowed no loans, adding that the expansions would be financed through its huge cash flows.

Al Othaim’s net profit after Zakat and tax soared to SAR 882.5 million in the first nine months of 2022, from SAR 150.5 million in the year-earlier period. In Q3 2022, net profit after Zakat and tax surged to SAR 744.6 million, buoyed by a 17.37% YoY growth in sales from existing and new stores, according to Argaam's data.