Rising costs to weigh on Almarai in 2018: Albilad Capital

Almarai Company’s 2017 fourth-quarter net profit of SAR 513 million was 1.2 percent short of Albilad Capital estimates and 2.6 percent lower than consensus forecast, the brokerage said in an earnings review.

Looking ahead, Albilad Capital said, rising costs due to hiring non-Saudi labor and lower purchasing power among consumers as the Kingdom cuts subsidies and starts the levy of value-added tax (VAT) will weigh on Almarai Co.’s performance in 2018.

Additionally, the diary producer may lose revenues generating from Qatar as the rift between the Gulf states continues. Almarai reported revenues of SAR 338 million in Qatar before the GCC crisis in 2017, the report said.

“Almarai is also committed to secure all its needs of animal feed from imports by the beginning of 2019,” it added.

Albilad Capital maintained its valuation for Almarai at SAR 56 per share, with a “neutral” outlook.