First Mills allocates 90% of investments to boost production: CEO

A production line of First Mills 

First Milling Co. (First Mills) made clear strategic plans aimed at expanding its product range and strengthening its market presence, CEO Abdullah Ababtain told Argaam in an interview.

He pointed out that 90% of the company's investments are dedicated to supporting and boosting production capacities.

The company achieved outstanding performance in Q3 2024 as it seized market opportunities, Ababtain said, adding that the company successfully achieved strong sales growth across all product categories.

First Mills is actively exploring opportunities to enter new sectors after launching several specialized poultry feed products that will boost feed sales in the future.

Ababtain highlighted that the company has diversified its portfolio across various categories, including small-package products for direct consumers and specialized markets. It has also expanded into the poultry feed sector and by-products derived from bran. These efforts are part of a comprehensive strategy aimed at enhancing the product mix.

Geographically, First Mills seeks to continue expanding its footprint to cover all parts of the Kingdom by leveraging its four mills strategically located across the country with a combined production capacity of 4,900 tons per day, the CEO noted.

Q) First Mills’ profit increased 13% to SAR 61.28 million in Q3 2024, from SAR 54 million in the year-earlier period. Can you provide an overview of these results?​

A: First Mills continued to deliver exceptional performance in the third quarter of 2024, recording a 5.3% growth compared to the year-earlier period, reaching SAR 261.2 million. Meanwhile, we achieved a strong increase in net profit of 13.4% to SAR 61.3 million with a profit margin of 23.5% for Q3 2024. This outstanding financial performance is attributed to the company's ability to seize available market opportunities. The company succeeded in achieving strong sales growth across all product categories, as well as a significant 48% growth in the volume of small-package products quarter-on-quarter (QoQ).

Q) What are the key contributors to the 5.3% year-on-year revenue increase in Q3 2024?

A: Looking at the company's sales in Q3 2024, we managed to achieve strong growth in all our product categories, which significantly contributed to the increase in revenue. We witnessed strong growth in flour sales of 9.3% driven by growth in volumes and diversification of the sales mix. In addition, the company's successful distribution strategy led to the continuous increase in the volume of sales for the small-package flour products.

Q) Did geographic expansion and higher sales of small packages help enhance the company’s performance during this quarter?

A: First Mills operates in four strategic regions in the Kingdom, enabling it to enhance its supply chain efficiency and expand its reach. This advantage directly supports core products and the development of final products, especially those with higher profit margins, such as small packages, which recorded growth in sales volumes on a year-on-year (YoY) basis for the period. This performance confirms the success of the company's strategy in diversifying its product lines and reflects the strong trust our customers place in us.

Q) What are the reasons for a 19.3% QoQ rise in Q3 feed sales revenue? How do you view this rise in the long term?

A: The 19.3% YoY increase in feed sales revenue in Q3 2024 was due to several key factors. We successfully implemented effective sales strategies, along with improving the product mix, in line with the continuous changes in demand dynamics in this market segment. Seasonal factors also played a significant role, as the sector witnessed notable activity during this quarter, leading to increased consumption.

In the long term, with our expectations and confidence in the continued growth driven by increasing demand for high-quality feed in both the livestock and poultry sectors, we are dedicating our investments to innovation, quality, supply chain improvement, and enhanced customer engagement, which will significantly contribute to strengthening our market share.

Q) How does the company plan to strengthen its market share in the competitive feed and flour market?

A: In its efforts to strengthen its market share in the highly competitive feed and flour markets, First Mills focuses on expanding its product range and geographic reach. The company successfully diversified its portfolio across various categories, including small-package products for direct consumers and specialized markets, as well as expanding into the poultry feed sector and by-products derived from bran. These efforts are part of a comprehensive strategy aimed at enhancing the product mix.

On the operational side, First Mills is working to increase its production capacity through expansion projects, including the ongoing modernization of production capacities at Mill A in the company's Jeddah plant, which is in its final stages before resuming commercial operations. These upgrades aim to keep pace with growing demand and ensure optimal utilization of production facilities to achieve the required operational efficiency.

Q) Do you have plans to expand product offerings or enhance First Mills market presence?​

A: As we mentioned earlier, First Mills made clear strategic plans aimed at expanding its product range and strengthening its market presence, since 90% of the company's investments are dedicated to supporting and boosting production capacities.

The company is actively exploring opportunities to enter new sectors after launching several specialized poultry feed products that will boost feed sales in the future. Geographically, we seek to continue expanding our footprint to cover all parts of the Kingdom by leveraging the company's four mills strategically located across the country with a combined production capacity of 4,900 tons per day.